destined for excellenceto ensure the success of our customers. vision to expand in new markets while...

2O18 Annual Report

ExcellenceDestined for

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Caribbean Producers (Jamaica) Limited - 2018 Annual Report

MissionTo provide the highest levels of service and quality products available, in striving to ensure the success of our customers.

VisionTo expand in new markets while maintaining a leadership position in established markets, and to provide an energised and harmonious workplace for our employees.

We measure our effectiveness as a company by our ability to meet the expectations of our customers. We strive to ensure our professional team of representatives reflect this commitment. By building strong customer relationships we promote our continued growth.

• Integrity • Commitment• Going the Extra Mile

Customer Service Motto

Core Strengths

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CONTEN

TS

StrategyTo drive profitability through strong supplier relationships by delivering great products with exceptional service.

Financial Highlights 4

Notice of AGM 5

Message to Shareholders 6

The CEO’s Message to Shareholders 9

Board of Directors 10

Management Team 14

CPJ St. Lucia 17

Corporate Data 20

Top Ten Shareholders 21

Directors’ & Senior Managers’ Interests 21

Corporate Governance 23

Management Discussion & Analysis 35

Five-year Financial Review 37

Human Resources Report 38

Corporate Social Responsibility 41

Auditor’s Report 47

Audited Financial Statements 55

Form of Proxy

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financial

$107.8MGross Revenue (USD)

10%

Highlights

Increase in Revenue

$6.8MEBITDA (USD)

$28.4MGross Profit (USD)

$2.1MNet Profit (USD)

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Ordinary Resolutions1. To receive the Reports of the Directors and Auditors and

the audited accounts of the Company for the financial year ended 30 June 2018.

To consider and (if thought fit) pass the following resolution:

“THAT the Reports of the Directors and Auditors and the Audited Accounts of the Company for the financial year ended 30 June, 2018 be adopted”.

2. To declare the interim dividend paid on 19 January 2018 as final for the year under review.


“THAT the interim dividend of $0.06 paid on 19th January 2018 to shareholders be declared as final for the year under review”.

3. In accordance with Article 102 of the Company’s Articles Incorporation, Dr. David Lowe, Mr. Ronald Schrager and Mr. Richard M. Hall, retire from office by rotation and, being eligible, offer themselves for re-election.

To consider and (if thought fit) pass the following resolutions:

(a) “THAT Dr. David Lowe who retires by rotation and being eligible for re-election be and is hereby re-elected a Director of the Company”.

(b) “THAT Mr. Ronald Schrager who retires by rotation and being eligible for re-election be and is hereby re-elected a Director of the Company”.

(c) “THAT Mr. Richard M. Hall who retires by rotation and being eligible for re-election be and is hereby re-elected a Director of the Company”.

4. To appoint the Auditors and authorize the Directors to fix the remuneration of the Auditors


“THAT KPMG, Chartered Accountants, having agreed to continue in office as auditors, be and are hereby appointed auditors of the Company to hold office until the next Annual General Meeting at a remuneration to be fixed by the Directors of the Company”.

5. To fix the remuneration of the Directors.


“THAT the amount included in the Audited Accounts of the Group for the year ended 30 June 2018, as remuneration for their services as Directors be and is hereby approved”.

Dated this 28 day of October 2018

By Order of the Board

Theresa ChinCompany Secretary

Notice of Annual General Meeting

A form of proxy accompanies the Notice of Annual General Meeting. A shareholder who is entitled to attend and vote at the Annual General Meeting of the company may appoint one or more proxies to attend in his/her place. A proxy need not be a shareholder of the company. All completed original proxy forms must be deposited together with the power of attorney or other document accompanying the proxy at the registered office of the company at least 48 hours before the Annual General Meeting.

NOTICE IS HEREBY GIVEN THAT the Annual General Meeting of Caribbean Producers (Jamaica) Limited Group will be held at Sunscape Splash, Sunset Drive, Freeport, Montego Bay, St. James, on Monday February 11, 2019 at 3:00 p.m. for shareholders to consider, and if thought fit, to pass the following resolutions:

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Caribbean Producers Jamaica Limited (CPJ) continues to focus on its five-year business transformation plan. During the Fiscal Year 2017/2018, we were squarely focused on

the commencement of construction of our new 56.000 square foot Warehouse and Distribution Centre in Jamaica, the commis-sioning of our expanded facilities in St. Lucia, as well as imple-menting infrastructural changes in technology and information. Our company also benefited significantly from changes made to our international procurement strategy, geared towards demand planning fulfilment.

The Tourism Industry, according to estimates from the World Travel and Tourism Council, continues to positively impact the Jamaican economy for Fiscal Year 2017/2018, with estimates of total contribution almost at 35% to Jamaica’s Gross Domestic Product. Additionally, tourist arrivals continue to increase year on year, thus creating a larger base of consumers for our unique tourism product. In order to fuel this expected growth in the tourism industry, CPJ continues to focus on meeting and exceed-ing the expectations of our valued customers.

Effective relationship management of our customers remains a core principle of CPJ. For the year 2017, we were humbled to have received the RJR Gleaner Hospitality Award for Purveyor of the Year. As we continue our evolution as a proud Jamaican com-pany of 24 years, we remain committed to improve our service levels to our customers as the partner of choice for food service distribution in the tourism industry.

During Fiscal Year 2017/2018, our company saw the first phase of the organisational restructure geared towards increased

...tourist arrivals continue to increase year on year, thus creating a larger base of consumers for our unique tourism product. In order to fuel this expected growth in the tourism industry, CPJ continues to focus on meeting and exceeding the expectations of our valued customers.

Message to the Shareholders

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efficiencies and leveraging economies of scale across Jamaica and St. Lucia. The Board of Directors continues to be encouraged by the energy of our Executive team, led by Dr. David Lowe.

The Caribbean’s dynamic tourism product must respond to global market changes in consumption patterns. Our brand portfolio is therefore integral in fulfilling the varied consumption trends of the wide gamut of tourists in Jamaica and St. Lucia.

Sustainability of our natural resourcesWe continue to be concerned about the sustainability of

our natural resources, not only in Jamaica but also across the Caribbean. The growth of the tourism sector requires a cohesive plan with all stakeholders to ensure that a sustainable tourism model can continue to support the growth of our economies for generations to come. CPJ, through its partnership with various non-governmental organisations, continues to do its part to expand environmental educational opportunities. We are par-ticularly encouraged by recent legislative changes and the shift in focus of some of our major partners with the introduction of biodegradable products, the recycling of paper and plastic as well as increased educational opportunities for staff members on conservation.

We are reminded of Franklin D. Roosevelt’s words that “A smooth sea never made a skilled sailor”. Over the last two and a half decades our company’s journey has had its fair share of challenges, but we continue to be encouraged by the dedi-cated team of service-oriented professionals who have always navigated our company into safe waters. We look forward to the voyage ahead of us, proud, energised and confident in our ability to continue to deliver long-term value to our shareholders and to our community.

A. Mark HartChairman

Thomas TylerCo-Chairman

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“Our expanded state of the art warehouse and distribution centre will provide close to 200,000 square feet of cold and dry storage”.

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CPJ continues its business transformation plan to enable the com-pany to build capacity and achieve greater shareholder value in the future. Our mantra of customer-centric service has continued

to inspire confidence amongst key stakeholders cementing our role as the purveyor of choice in the food service industry.

During this fiscal year we commenced the first phase of our expan-sion plans of CPJ campus which will include administrative offices, man-ufacturing, distribution and warehouse operations. With the expansion of our state of the art warehouse and distribution centre, CPJ Campus’ facilities will provide close to 200,000 square feet of cold and dry storage.

I remain encouraged by the mandate given to me by the Board of Directors and I am pleased to report that we have remained steadfast to our mission to execute the five (5) business pillars of our business transformation plan:

• Best business supported by core values and a respected corporate brand;

• Best clients supported by the best service delivery;

• Best products with the best value and synergy with our portfolio;

• Best practices aligned with industry benchmarks;

• Best people with the best fit for the future growth of the business.

For Fiscal Year 2017/2018 we sought to aggressively attract, recruit and retain the best talent in various roles across the organisation. We continue to encourage an enterprising spirit for our employees whilst focusing on expanding their capacity to be true industry leaders in the food service distribution category. We have every confidence that our customer retention and acquisition strategy will continue to yield successful results ultimately redounding to the benefit of our valued shareholders.

I am motivated and thankful for the commitment of our executive team and the service professionals that they lead, along with the invalu-able support of the executive Board directors.

Our company’s future is solid, and our people remain the catalyst for inspiring responsible growth in Jamaica and the Caribbean.

Dr. David LoweChief Executive Officer

CEO’s Message to Shareholders

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The Board of Directors

A. Mark HartExecutive Chairman

Mr. Hart is the founding and controlling shareholder of Caribbean Producers (Jamaica) Limited. He served as its Chief Executive Officer from 2004 until early in 2011, when he was promoted to his current position of Executive Chairman. He began his career with the Hart family’s group of companies in 1982. He has also served as Chairman of Mon-tego Bay Ice Company Limited (a JSE Main Market listed company), and is currently the Chairman of the Montego Bay Free Zone Company Limited. Mr. Hart is a member of the boards of NMIA Airports Limited, Port Authority of Jamaica, Alpha Angels Investor Group, Bank of Nova Scotia Jamaica Limited, Scotia Group Jamaica Limited and We Care for Cornwall Regional Hospital. Mr. Hart is a graduate of the University of Miami.

Thomas N. TylerCo-Chairman

Thomas (Tom) Tyler co-founded Caribbean Producers Jamaica Limited with Mr. Hart in 1994. He was appointed Co-Chairman of the company in June 2016. Prior to estab-lishing CPJ, Mr. Tyler worked at Caribbean Producers; a US based family company supplying the Caribbean hospitality sector. Mr. Tyler is a Director of CPJ Investments and Chairman of CPJ St. Lucia Limited, subsidiary companies of CPJ, and also serves as President of Hospitality Services Unlimited, a company registered in the U.S. that en-gages in business with CPJ. Mr. Tyler was educated at the University of South Florida and holds a degree in Gemology from the Gemological Institute of America (GIA).

Dr. David Lowe Chief Executive Officer

Dr. David Lowe was appointed Chief Executive Officer in June 2016. He originally joined CPJ as the Vice President of Marketing and Retail Sales before being promoted to Chief Revenue Officer. Dr. Lowe makes day-to-day management decisions to lead the financial, operational and strategic operations of the company. Previously, Dr. Lowe has held distinguished positions in investment banking, management consult-ing and government. He currently serves as a board member of the National Health Fund, Chairman of the Western Region Health Authority (WRHA) and the National Compliance Regulatory Authority (NCRA). Dr. Lowe received his Ph.D in Corporate Finance from the Manchester Business School, University of Manchester, UK.

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Jan PolackChief Financial Officer

Ms. Polack was appointed Chief Financial Officer in 2006. Her primary focus at CPJ is to oversee financial operations, IT and facilitate company expansion through careful budgeting and planning. Prior to her work with the company, Ms. Polack served as Financial Controller for over 16 years at various hotel chains in Jamaica. A former Director of the Montego Bay Chamber of Commerce and Industry, she serves as a Director of Ironrock Insurance Co. Ltd, CPJ Investments and CPJ St. Lucia. Ms. Polack is a Certified Public Accountant (CPA) and holds a Bachelor of Accounting from St. Leo’s College, Florida.

Theresa ChinNon-Executive Director and Company Secretary

Mrs. Chin was appointed to the Board in September 2004. She serves on both the Audit and Compensation Committees. Previously, Mrs. Chin worked in Canada as a financial analyst for the Four Seasons Hotel, as a tax consultant for the Borough of East York, and as an auditor at Deloitte & Touche. Mrs. Chin has worked with the Hart family shareholders since 1993. She is currently the Managing Director of Montego Bay Ice Company Limited, as well as acting as Financial Manager for most of the oth-er Hart group companies (not including this Company). Mrs. Chin holds a Bachelor of Science in Mathematics from York University in Toronto, Ontario.

Christopher BerryNon-Executive Director

Mr. Berry was appointed to the Board in February 2016. He serves on the Compensa-tion Committee. Mr. Berry brings over 25 years of experience in the securities indus-try to his role on the Board. Mr. Berry is currently the Executive Chairman of Mayber-ry Investments Limited. A former Deputy Chairman of the Jamaica Stock Exchange, he also serves on the Boards of Lasco Financial Services, Ironrock Insurance Co. Ltd, Apex Health Care Associates Limited and Apex Pharmacy Limited. Mr. Berry holds an Honours Bachelor of Industrial Engineering from the Georgia Institute of Technology in Atlanta, Georgia.

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Konrad ‘Mark’ BerryNon-Executive Director

Mr. Berry was appointed to the Board in February 2016. He serves on the Audit and Corporate Governance and Nomination Committees. Mr. Berry was a founding Director of Mayberry Investments Limited and currently serves as Vice Chairman. He brings over thirty years of experience in day-to-day operations and developing management and operating systems in the securities industry to his role on the Board. Mr. Berry holds an Honours Bachelor of Science in Management and Eco-nomics from the University of the West Indies.

L. Camille ShieldsNon-Executive Independent Director

Ms. Shields was appointed to the Board in February 2014. She serves on the Audit, Compensation, and Corporate Governance and Nomination Committees. A Notary Public, Barrister and Attorney-at-Law, Ms. Shields has a private practice specializing in commercial, land, and estate law. Her client base spans multiple industries rep-resenting companies and individuals in Jamaica and overseas. She holds a Bache-lor of Arts from the University of Western Ontario and a Bachelor of Laws from the University of London. She was called to the Bar of England and Wales and entered as a member of the Honourable Society of Lincoln’s Inn, thereafter enrolling as an Attorney-at-Law in Jamaica.

Richard ‘Mark’ HallNon-Executive Independent Director

Mr. Hall was appointed to the Board in September 2011. He serves on the Corporate Governance and Nomination, Audit, and Compensation Commit-tees. For the past 30 years, Mr. Hall has been the CEO of Hall’s Investment Limited, operating the IGL filling plant franchise and Boomerang Tyre sales in western Jamaica.

The Board of Directors (Cont.)

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Robert J. Hooker, Jr.Non-Executive Director

Mr. Hooker was appointed to the Board in June 2011. He serves on the Corporate Gov-ernance and Nomination Committee. Mr. Hooker brings over 40 years of food industry experience to his role on the Board. Previously, he served as Executive Vice President of Florida Shortening Company, President and CEO of Purity Products Inc., and he founded and served as President and CEO of Emerald Diversified Inc. He is currently President of Honey Industries Inc. He has been a consultant to CPJ since 2005. Mr. Hooker was educated at Norwich University and Brookdale College.

Ronald SchragerNon-Executive Director

Mr. Schrager was appointed to the Board in June 2011. He serves on the Audit and Compensation Committees. Mr. Schrager is co-founder and a principal of Eightfold Real Estate Capital LP. Prior to forming Eightfold, he served in the United States as the COO of LNR Property LLC and held positions at Lennar and Chemical Bank (now JP Morgan Chase). Mr. Schrager holds a Master of Business Administration from Harvard Business School.

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Mark Hart, Executive Chairman

Thomas Tyler, Co-Chairman

Dr. David Lowe, Chief Executive Officer

Debbie ClarkeDirector of Human Resources

Debbie Clarke was appointed Director of Human Resources in February 2016. She brings over 20 years of human resources and administrative experience to CPJ, where she is responsible for both day-to-day human resources needs and developing strategic initiatives jointly with the Executive team to integrate HR policies into the organization’s overall mission and operational strategy. Prior to joining CPJ, Ms. Clarke worked with Island Entertainment Brands. She holds a Master of Science in Hospitality & Tourism Man-agement from Revans University and is

currently completing her Executive Master in Public Administration (UCC).

Hugh LoganDirector of Hospitality Sales and Export

Mr. Logan was appointed Director of Hospitality Sales and Export in 1997. He originally joined CPJ in February 1997 as the Beverage Systems Manager and was awarded increasingly senior roles in management. Mr. Logan acts as a liaison between the company and its client base, ensuring quality service resulting in com-pany growth. Prior to joining the company, Mr. Logan held various management positions in the hotel sector. He gradu-ated from Seneca College and Queen’s University (both of Ontario, Canada) where he received a Bachelor of Science in Psychology.

Kesha-Ann HarperDirector of Finance

Ms. Harper was appointed Director of Fi-nance in September 2014. She brings close to 20 years’ experience in finance and au-diting to CPJ, where she is responsible for the day-to-day operations of the finance department, overseeing the Accounts Pay-able, Receivable, and Inventory teams. Pri-or to joining the company, Ms. Harper held several key positions in public and private entities. She served as the Vice President of Corporate Strategies Limited and as Assistant Vice President of Finance at the Port Authority of Jamaica with responsibil-ity for six of its subsidiaries. Ms. Harper is a Certified Public Accountant (CPA) and an accredited Certified Information Systems Auditor. She holds a Bachelor of Science in Chemistry and Management Studies

Senior Management Team

t e MaMark Hart Thomas Tyler David Lowe Debbie Clarke

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from the University of the West Indies and a Master of Business Administration in Banking and Finance from the University of the West Indies (Mona).

Rhys CampbellCommercial Director

Mr. Campbell was appointed Commer-cial Director in April 2017. He brings well over a decade of experience in corporate and regulatory affairs to CPJ, where he is responsible for marketing, retail sales and corporate affairs. Prior to joining the company, Mr. Campbell lived and worked extensively across the English, Dutch and French speaking Caribbean. He has held prominent positions at Carreras Limited, British American Tobacco, Jamaica Public Service Company Limited, and the Bristol Group of Companies (Bahamas).

Mr. Campbell holds a Bachelor of Science in International Relations and Spanish as well as a Master of Science in Government specialising in International Commerce and Trade from the University of the West Indies (Mona).

Ryan PeartDirector of Operations

Ryan Peart was appointed Director of Operations in October 2016. He original-ly joined the company in April 2016 as Senior Manager of Operations. He brings over 10 years of operational experience to CPJ, where he is responsible for leading the warehouse, distribution, manufac-turing and business operations including CPJ Market and CPJ Deli, and CRU Bar + Kitchen in Kingston. Previously, Mr. Peart oversaw the successful expansion of the

motor vehicle shipment sector at Kingston Wharves Limited. Mr. Peart holds a Bache-lor of Science in Accounting and a Master of Business Administration specialising in International Business from The Universi-ty of the West Indies (Mona) as well as a Diploma in Terminal Management from Lloyd’s Maritime Institute.

Vivek GambhirChief Finance and Information Officer- Designate

Vivek Gambhir is expected to commence his appointment as the Chief Finance and Information Officer in the new Fiscal Year 2018/2019. Mr. Gambhir’s new role will oversee the company’s Financial and Information Technology operations. Mr. Gambhir is a Fellow of the Institute of Chartered Accountants of India and an Associate member of the Institute of

W o kr !

Hugh Logan Kesha-Ann Harper Rhys Campbell Ryan Peart Vivek Gambhir

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Company Secretaries of India. He has over twen-ty-five years of diversified professional experience in operational and corporate finance having held senior roles across the industries of hospitality, banking and fast-moving consumer goods.

Throughout Mr. Gambhir’s career he has specialised in business transformation having navigated several multina-tional corporations such as RBS India, RPG Itochu, MEN -ESPN, East India Ho-tels- The Oberoi as well as Misys Plc in capitalising on growth opportunities. He is a graduate of the Uni-versity of New Delhi with a Bachelor of Commerce and possesses a Diploma in Hotel Management from the Institute of Hotel Management Catering & Nutrition of New Delhi.

Note: Effective Friday, August 3, 2018 Ms. Jan Polack resigned from the position of Chief Financial Officer and the company.

Managers (Cont.)

CPJ Fresh Market will be commissioned in St. Lucia in Fiscal Year 2018/2019 targeting local and international Customers with a diverse array of wines, spirits and food.

CPJ St. Lucia

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Our growth in CPJ St. LuciaCPJ St. Lucia continued to deliver strong growth in the second full year of its

operations largely influenced by the company’s aggressive sales and market-

ing strategy of wines and spirits such as Jack Daniels, Remy Martin Cointreau,

Mount Gay, Kendall Jackson, Concha y Toro and Yellow Tail. For Fiscal Year

2018/2019, will be commencing the operations of CPJ Fresh Market targeting

local and international customers with the diverse array of products available in

the CPJ St. Lucia portfolio.

Additionally, CPJ St. Lucia will be fulfilling its environmental sustainability

mandate with a robust internal conservation campaign augmented with the

installation of 630 solar panels that integrate the usage of renewable energy.

Tony DuBoulay (Director), Richard DuBoulay (Director), Dunstan DuBoulay (Director)

Board of Directors Thomas Tyler (Chairman)Mark Hart (Director)Jan Polack (Director)

Richard DuBoulay (Director)Tony DuBoulay (Director)

Dunstan DuBoulay (Director)

Senior Management Richard DuBoulayGeneral Manager

Glenroy RegisFinance Manager

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HEADQUARTERSMontego BayCaribbean Producers (Jamaica) Limited 1 Guinep Way Montego Freeport St. James, Jamaica

Mailing Address:P.O. Box 302, Montego Bay St. James, Jamaica W.I.Tel: (876) 979-8134 / 8136Fax: (876) 953-6898

Email: [email protected]: www.cpj.com www.cpjmarketonline.com

KingstonCPJ Market & CRU bar71 Lady Musgrave Road Kingston 10, JamaicaTel: (876) 633-5973 / 633-5976Tel: (876) 618-0852 (CRU)

REGISTERED OFFICEShop#14, Montego Freeport Shopping CenterMontego Freeport, St. James, Jamaica

AUDITORSKPMG6 Duke Street, Kingston, Jamaica

INTERNAL AUDITORSPriceWaterhouseCoopers LLPScotiabank CentreDuke StreetKingston, Jamaica

BANKERSThe Bank of Nova Scotia Jamaica LimitedScotiabank CentreDuke StreetKingston, Jamaica

National Commercial BankBaywest CenterHarbour StreetMontego Bay, Jamaica

Sagicor Bank Jamaica Limited17 Dominica Drive Kingston 5, Jamaica

Citibank N.A. Jamaica19 Hillcrest Avenue Kingston 6, Jamaica

JAMAICA SAINT LUCIA

HEADQUARTERS CPJ St. Lucia Cul De Sac Castries, St. Lucia

AUDITORSKPMGMorgan Buiding P.O. Box 1101 Castries, St. Lucia

REGISTERED OFFICE6 Brazil StreetCastries, St. Lucia

BANKERSBank of Nova ScotiaCastries, St. Lucia

RBC St. Lucia Limited Castries, St. Lucia

Corporate Data

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Shareholders InterestsTop Ten (10) Shareholders As at 30 June 2018

NAME SHARES %Sportswear Producers Limited 248,000,000 22.5455

Mayberry Jamaican Equities Limited 218,252,305 19.8411

Wave Trading Limited 180,632,858 16.4212

Thomas Tyler 82,830,563 7.5301

Oniks Investments Limited 75,306,020 6.8460

Ho Choi Limited 33,581,579 3.0529

Beech Realty Company Limited 31,000,000 2.8182

PWL Bamboo Holdings Limited 16,007,712 1.4552

ATL Group Pension Fund Trustees Nom. Ltd 12,982,044 1.1802

Bricks Limited 12,000,000 1.0909

Directors, & Senior Management

,s Interests As at 30 June 2018

The interests of the Directors and Senior Officers, holding office at the end of the quarter, along with their connected persons, in the ordinary stock units of the Company were as follows:

DIRECTORS POSITION RELATIONSHIP SHARES %Sportswear Producers Limited 248,000,000 22.5455 Mark Hart Chairman Connected party holding Mayberry West Indies Limited 218,252,305 19.8411 Konrad Mark Berry Director Connected party holding Christopher Berry Director Connected party holding Wave Trading Limited 180,632,858 16.4212 Mark Hart Chairman Connected party holding Thomas Tyler Co-Chairman Self 82,830,563 7.5301 Bamboo Group Holdings Limited 15,000,012 1.3636 Mark Konrad Berry Director Connected party holding Bricks Limited 12,000,000 1.0909 David Lowe Director Connected party holding Jan Polack Director Self 2,790,185 0.2537 Alpine Endeavors Limited 1,881,100 0.1710 Ronald Schrager Director Connected party holding A+Medical Centre Limited 1,000,000 0.0909 Christopher Berry Director Connected party holding Apex Pharmacy Limited 921,936 0.0838 Christopher Berry Director Connected party holding Konrad Mark Berry Director Self 500,000 0.0455 Robert J. Hooker Director Self 472,000 0.0429 Theresa Chin Director Self 288,900 0.0263 Richard Mark Hall Director Self 114,090 0.0104 SENIOR MANAGEMENTHugh Logan 144,343 0.0131

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Cariburst is a locally manufactured line of juice concentrates from CPJ made from real fruit. The product is best enjoyed mixed with chilled spring water.

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Corporate Governance

Caribbean Producers Jamaica Limited

(CPJ) is recognised as Jamaica’s

leading food and non-food, wines and spirits

distributor for major internationally-renowned

brands, as well as a manufacturer, retailer and

a distributor in the retail sector for a wide

array of international and locally manufactured

products. The Company has the distinction

of being awarded the “Purveyor of the Year”

award by the Jamaica Hotel and Tourist

Association 10 times in 16 years.

The Company was listed on the Junior Market of the Jamaica Stock Exchange (JSE) in 2011 and has earned several awards at the JSE’s Best Practices awards ceremony over several years. The Company holds 100% of the issued share capital of its subsidiary, CPJ Investments Limited, incorporated on September 16, 2013. The principal activity of CPJ Investments Limited is holding a 51 % investment in CPJ (St. Lucia) Limited, a company that wholesales and distributes food and beverages and non-food supplies. Both companies are incorporated and domiciled in St. Lucia.

The Board of CPJ has defined a set of corporate governance best practices and guidelines that it considers to be the most appropriate for the Company and its subsidiaries. The Board’s primary role is to protect the future of the Company, thus, its corporate governance guidelines help to fulfil the interests of shareholders, the requirements of regulators and corporate re-sponsibility towards its stakeholders, ensuring that the Board has the necessary authority and processes to review and evaluate the Company’s operations, when required. Further, these guidelines allow the Board to make decisions that are independent of the Management. The Board periodically reviews these guidelines and they can be accessed from our website www.cpj.com.

This statement describes the main Corporate Governance practices in place during the year ending June 30,2018.

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Roles and Responsibilities of the BoardDirectors are accountable to shareholders for promoting and

managing the performance of the Company in both the short and long term. Their focus is to enhance the interests of share-holders and other key stakeholders and to ensure the Company is properly managed.

The responsibilities of the Board include:

• Contributing to the development of and approving the Company’s strategy and setting financial targets;

• Monitoring the implementation and execution of strate-gy and performance against financial targets;

• Appointing and overseeing the performance of senior executive management;

• Monitoring the Company’s culture and values.

The Board has reserved to itself, in addition to those matters reserved to it by law, the following matters and all power and authority in relation to those matters:

• Composition of the Board itself (including appointment and retirement or removal of Directors);

• Periodic evaluation of the Board, its committees and individual Directors;

• Oversight of the Company, including its control and accountability systems;

• Appointing and removing the Chief Executive Officer;

• Ratifying the appointment and where appropriate, the removal of the Chief Financial Officer and the Company Secretary;

• Reviewing and overseeing the operation of systems of risk management and internal compliance and control, codes of ethics and conduct, and legal and regulatory compliance;

• Input into and final approval of management’s develop-ment of corporate strategy and performance objectives;

• Monitoring senior executive management’s performance and implementation of strategy, and ensuring appropri-ate resources are available;

• Approving and monitoring the progress of major capital expenditure, capital management, and divestitures;

• Approving and monitoring financial and other reporting;

• Approving the payment of dividends to shareholders;

• Approving the Company’s remuneration framework;

• Monitoring industry developments relevant to the Com-pany and its business;

• Developing suitable key indicators of financial perfor-mance for the Company and its business;

• The overall corporate governance of the Company, including strategic direction, establishing goals for man-agement and monitoring the achievement of these goals; and

• The oversight of Committees.

The Board has delegated specific responsibilities to three Board Committees which act, subject to the terms of their respec-tive charters, in an advisory capacity, subject to the oversight of the Board.

Day to day management of the Company’s affairs and the implementation of the corporate strategy and policy initiatives are formally delegated by the Board to the Chief Executive Officer and senior executive management of the Company. These dele-gations are reviewed periodically as appropriate.

Senior executive management must supply the Board with information in a form, timeframe and quality that will enable the Board to discharge its duties. Senior executive management report to the Board at Board meetings, providing updates on Company performance, initiatives and issues.

Senior executive management are issued with formal agree-ments setting out the terms of their appointment.

The Board generally meets on a quarterly basis, or more regu-larly as may be required. Further, as part of the Company’s annual strategic planning process, a Board and Senior Management strategy retreat is organised, to allow the Board to deliberate on various topics related to strategic alternatives, progress of ongo-ing strategic initiatives, risks to strategy execution and the need for new strategic initiatives required to achieve the Company’s long-term objectives On an annual basis, the Board sets finan-cial and non-financial performance targets for senior executive management and performance is assessed against these targets. A performance assessment for senior executive management is undertaken annually.

The Company Secretary, Theresa Chin, is accountable to the Board, through the Chair, on all matters relevant to the proper functioning of the Board. All Directors have direct access to the Company Secretary.

The Chief Executive Officer, Dr. David Lowe, is responsible for corporate strategy, planning, external contacts and all other matters related to the management of the Company. He is also responsible for achieving annual and long-term strategic business targets, maintaining awareness of the competitive landscape,

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opportunities for expansion, customers, markets, new indus-try developments and standards, and acquisitions to enhance shareholder value and implement the Company’s vision, mission, and overall direction. The CEO is the link between the Board and the Management and is also responsible for leading and evalu-ating the work of senior executives in line with the organisation structure.

The Chairman, A. Mark Hart, is responsible for fostering and promoting the integrity of the Board while nurturing a culture where the Board can work harmoniously for the long-term benefit of the Company and all its stakeholders. The Chairman is primarily responsible for ensuring that the Board provides effective governance and in so doing, presides over meetings of the Board and of the shareholders of the Company at its Annual General Meeting. The Chairman takes a lead role in managing the Board and facilitating effective communication among directors. He is responsible for matters pertaining to governance, including the organisation, composition and effectiveness of the Board and its committees, and the performance of individual directors in fulfilling their responsibilities.

The Chairman actively works with the Corporate Governance and Nomination Committee in the event of retirement or resig-

nation of directors, to help identify new candidates, induct new directors to the Board, plan for director succession, participate in the Board effectiveness evaluation process and meet as necessary with individual directors to provide feedback and advice.

Ethical Leadership The Company is committed to upholding the highest legal,

moral and ethical standards in all its corporate activities. The Board’s Charter sets out the five moral duties of Directors:

i. To act with intellectual honesty in the best interest of the Company and all its stakeholders. Conflicts of interest should be avoided. Independence of mind should prevail to ensure the best interest of the Company and its stakehold-ers is served.

ii. To devote serious attention to the affairs of the Company, obtaining relevant information required for exercising effective control and providing innovative direction to the Company.

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iii. To use and acquire the knowledge and skills required for be-ing effective and continuously developing competence; to be willing to be regularly evaluated to assess competence.

iv. To be diligent in performing Directors’ duties, devoting sufficient time to attend to Company affairs, and

v. To have the courage to take the risks associated with direct-ing and controlling a successful sustainable enterprise, but also the courage to act with integrity in all Board decisions and activities.

Conflicts of InterestTo ensure that any personal interests of a Director in a matter

to be considered by the Board are brought to the attention of the Board, the Company has developed protocols that require each Director to disclose any contracts, interests in transactions and other directorships which may involve any potential conflict. Appropriate procedures have been adopted to ensure that, where the possibility of a material conflict arises, the Director does not participate in discussion on the issue or vote in respect of the matter at the meeting where the matter is considered.


Board CompositionIn accordance with its charter, the Board is comprised of

Directors with a mix of skills and expertise to enable the Board to effectively oversee all aspects of the Company’s operations and enhance its performance. These include but are not limited to the following skills and experience:

• Industry

• Strategy

• Finance/Audit/Risk

• International Business

• Corporate Governance

• Brand and Marketing

• Mergers and Acquisitions

The Board considers that it has a good mix of skills which pro-vide good corporate governance and oversight and are aligned with the Company’s strategy “To drive our profitability through strong supplier relationships by delivering great products with exceptional service”. The areas of expertise possessed by direc-tors are shown in the Table below.

Board Member Qualifications, Skills & Experience

A. Mark Hart

Dr. David Lowe

Jan Polack

Thomas Tyler

Theresa Chin

Richard M. Hall

L. Camille Shields

Robert Hooker

Ronald Schrager

Christopher Berry

Konrad Mark Berry

Industry

•

•

•

•

•

•

•

Strategy &

Leadership

•

•

•

•

•

•

•

•

•

•

Finance

& Audit

•

•

•

•

•

•

Legal

•

Int’l

Business

•

•

•

•

•

Governance

•

•

•

•

•

•

•

•

•

•

•

Brand &

Marketing

•

•

•

•

•

•

•

•

Mergers &

Acquisitions

•

•

•

•

•

•

•

•

•

•

•

Area of expertiseName of Director

27


The Board is also structured so that it has an appropriate mix of executive, non-executive and independent directors to main-tain its independence, and separate the functions of governance and management. The composition of the Board adheres to the following principles:

• The Board must comprise members with a broad range of experience, expertise, skills and contacts relevant to the Company and its business;

• The number of Directors may be increased where the Board considers that additional expertise is required in specific areas or when an outstanding candidate is identified;

• At least half of the Board must be non-executive Directors, at least two of whom must also be independent.

As at June 30, 2018, the Board consisted of eleven Directors: four Executive Directors, including the Executive Chairman, the Co-Chairman, the Chief Executive Officer and the Chief Financial Officer, and seven Non-Executive Directors, among them two Independent Directors. One third of Directors (excluding the CEO and a Director appointed to fill a casual vacancy and rounded down to the nearest whole number) will retire at the next annual general meeting. Other than the CEO, no Director may remain in office for more than three years without resigning and standing for re-election.

Directors’ IndependenceThe Board has adopted specific principles in relation to Direc-

tors’ independence, which state that, when determining indepen-dence, a Director must be a non-executive and the Board should consider whether the Director:

• Is a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial shareholder of the Company;

• Is employed, or has previously been employed in an ex-ecutive capacity by the Company, and there has not been a period of at least three (3) years between ceasing such employment and serving on the Board;

• Has, within the last three (3) years, been a principal of a professional advisor or a significant consultant to the Company, or an employee significantly associated with the service provided, except in circumstances where the advisor might be considered to be independent, notwithstanding their position as a professional advisor, due to the fact that fees payable by the Company to the advisor’s firm represents an insignificant component of its overall revenue;

• Is a significant supplier or customer of the Company, or an officer of or otherwise associated directly or indirectly

with a significant supplier or customer of the Company;

• Has a material contractual relationship with the Company other than as a Director;

• Is free from any interest and any business or other rela-tionship, which could, or could reasonably be perceived to, materially interfere with the Director’s ability to act in the best interests of the Company.

Based on these principles, the Directors deemed to be inde-pendent as at June 30, 2018 are:

o Richard M. Hall, ando L. Camille Shields

Induction Programme for New Directors and on-going training for Directors

A formal induction programme is provided to all new Direc-tors, enabling them to actively participate in Board decision-mak-ing as soon as they are appointed. Induction ensures that they have a full understanding of the Company’s financial position, strategies, operations and risk management policies. It also elab-orates on the respective rights, duties, responsibilities and roles of the Board.

New Directors are invited to one-on-one meetings with the Chairman and management and a tour of the Company’s offices, retail outlets, warehouses and manufacturing facilities in Kingston and Montego Bay. All Directors are regularly updated on relevant industry and governance issues. Heads of Business Units regularly make presentations to the Board on their areas of responsibility.

Independent Professional AdviceDirectors have the right, in connection with their duties and

responsibilities, to seek independent professional advice at the Company’s expense. Prior approval of the Chairman is required, but this approval will not be unreasonably withheld. The advice obtained is expected to be made available to all Board members in due course, where appropriate.

Code of ConductThe Company has developed a Code of Conduct which has

been approved by the Board and applies to all Directors and employees. The Code is reviewed by the Board and updated as necessary. The Code draws together all of the Company’s practic-es and policies.

The Code reflects the Company’s values and reinforces the need for Directors, employees, consultants and all other represen-tatives of the Company to always act in good faith, in the Compa-ny’s best interests and in accordance with all applicable policies,

28

procedures, laws and regulations relevant to the countries in which the Company operates.

Trading In Company Securities by Directors, Senior Executive Management & Employees

The Company has a Securities Trading Policy which regulates dealings by Directors, senior executive management and employ-ees in shares, and other securities issued by the Company.

The Securities Trading Policy provides that Restricted Persons, including the Directors and senior executive management, are nor-mally precluded from trading in the Company’s securities during Blackout Periods. The Policy also imposes an over-riding restriction on Directors and employees who may not trade in the Company’s securities whilst in possession of price sensitive information.

Trading in the Company’s securities during Blackout Periods may be authorised under the Policy where the Restricted Person is in se-vere financial hardship or there are other extenuating circumstances.

Disclosure and TransparencyThe Company is committed to timely disclosure of material

information to shareholders and the market and has a Disclosure Policy that identifies matters that may have a material effect on the price of the Company’s securities including ensuring that any required market announcements are reported to the Jamaica Stock Exchange (JSE) in a timely manner.

The Company aims to keep shareholders informed of the Compa-ny’s performance and all major developments related to its opera-tions and information is communicated to shareholders through:

• The Annual Report and Financial Statements, including the quarterly Financial Statements which are uploaded to the Jamaica Stock Exchange’s platform and the Company’s website. A copy of the Annual Report, either in printed or electronic form, is distributed to all shareholders on record;

• The Annual General Meeting, and any other formally con-vened Company meetings; and

• All other information released to the JSE and subsequently posted on the Company’s website www.cpj.com.

CRU Bar + Kitchen is one of Kingston’s finest rooftop destinations serving a wide array of premium food, wines and spirits.



29


Meetings of the Board During the year, the Board formally met on five occasions. Details of each director’s attendance at the meetings and the Annual General Meet-ing are outlined below.

In addition, the Company’s website is regularly updated to provide information about the Company and its governance, including but not limited to, information about its history, Board and senior management, key policies and Company documents and copies of announcements to the market.

The agenda for meetings is prepared in conjunction with the Chairman, the Chief Executive Officer, the Chief Financial Officer and the Company Secretary. Standing items include the CEO’s report, division operating reports, committee minutes and reports, financial reports, strategic matters and governance and compliance updates. All submissions are circulated in advance of the meetings to allow the Board time to review and give due consideration to each report. Every Board member can suggest the inclusion of additional items on the agenda.

The Board meets at least once a quarter to review the quar-terly results and other items on the agenda, and on the occasion of the AGM. Additional meetings are held when necessary. In the event that Directors are unable to travel to Montego Bay for Board meetings, directors may join the meeting by video/telecon-ferencing to enable their participation.

Committees of the Board usually meet prior to or after the day of the Board meeting. Board members are expected to rigorously prepare for, attend and participate in Board and committee meet-ings on which they serve.

During the year ended June 30, 2018, 5 Board meetings were held. These were held on August 25, 2017; November 13, 2017;

February 12, 2018; May 8, 2018 and June 8, 2018. Members of the senior management team are regularly

invited to participate in Board deliberations and Directors have other opportunities to interact with management and employees during visits to the plant for Board meetings.

Board CommitteesThe Board has established standing Committees to assist in

the execution of its duties and to allow detailed consideration of complex issues. There are three current standing Committees of the Board, viz:

• Corporate Governance and Nomination Committee

• Audit Committee

• Compensation Committee

Each of these Committees has its own written charter setting out its role and responsibilities, composition, structure, member-ship requirements and the manner in which the committee is to operate. All matters determined by the Committees are submit-ted to the Board as recommendations for Board consideration. Each Director has unrestricted access to all committee meetings and records. Details of the committees may be found on the Company’s website at www.cpj.com/investor-relations/corpo-rate-governance

Director’s Name

A. Mark Hart, Executive Chairman

Thomas Tyler, Co-Chairman

Dr. David Lowe, Chief Executive Officer

Jan Polack, Chief Financial Officer

Ronald Schrager, Non-Executive Director

Robert Hooker, Non-Executive Director

Richard M. Hall,

Non-Executive, Independent Director

L. Camille Shields,

Non-Executive, Independent Director

Theresa Chin,

Non-Executive Director and Company Secretary

Christopher Berry, Non-Executive Director

Konrad Mark Berry, Non-Executive Director

AGM

Feb. 12, 2018

•

•

•

•

•

•

•

A

•

•

•

1

•

•

•

•

•

•

•

•

•

•

A

2

•

•

A

•

•

•

•

•

•

•

•

3

•

•

•

A

•

•

•

A

•

•

•

4

•

•

•

•

A

A

•

C

•

A

•

1

•

•

•

•

•

•

•

•

•

A

•

Eligible to

attend (A)

5

5

5

5

5

5

5

5

5

5

5

Attended

(B)

5

5

4

4

4

4

5

4

5

3

4

% attendance

(B/A)

100%

100%

80%

80%

80%

80%

100%

80%

100%

60%

80%

Board meeting number

30


CPJ is the exclusive Distributor of farm-raised Caribbean

Kai sourced from the Black River in St. Elizabeth.

31


Corporate Governance and Nomination Committee

The Board has a Corporate Governance and Nominations Committee to assist the Board and make recommendations to it in relation to the search for and appointment of new Directors (both executive and non-executive) and senior executive man-agement. The Nominations Committee consists of the following Directors:

• L. Camille Shields, Chairman and Independent Director

• Richard Mark Hall, Independent Director

• Konrad Mark Berry, Independent Director

During the reporting period, the committee met on one occa-sion by teleconference on December 6, 2017.


Number of meetings held = 1

Name # of meetings % of eligible

attended meetings attended

Committee Chairman:

L. Camille Shields 1 100%

Committee Members:

Richard M. Hall A 0%

Konrad Mark Berry 1 100%

The committee meeting focused on an in-depth discussion of the results of the Company’s JSE’s Corporate Governance Index rating and the opportunities to improve on the score at the next assessment.

The Committee agreed to recommend to the Board, the hiring of a Compliance Officer who would be responsible for Compli-ance and Corporate Affairs.

Audit CommitteeThe Board has established an Audit Committee to advise on

the establishment and maintenance of a framework of internal control and appropriate ethical standards for the management of the Company. The Audit Committee consists of the following Directors:

• Ronald Schrager, Chair

• Theresa Chin, Director & Company Secretary

• Richard M. Hall, Independent Director

• L. Camille Shields, Independent Director

• Konrad Berry, Independent Director

During the year, the Committee:

• Monitored the internal control framework, including information systems;

• Reviewed and recommended to the Board for approval, the operational and capital budgets;

• Approved the Internal Audit Charter and Audit Plan and discussed reports submitted by the Internal Auditor;

• Reviewed and recommended to the Board the approval of quarterly unaudited and annual audited financial state-ments and releases to shareholders;

• Reviewed the updating and implementation of Company policies and procedures;

• Assessed the independence and effectiveness of the ex-ternal auditor, KPMG, reviewed and agreed on their audit plan and fee proposal and received their audit report and management letter;

• Discussed with external consultant, PricewaterhouseCoo-pers, their evaluation and recommendations regarding the impact of IFRS standards on the Company’s financials;

• Reviewed and reported to the Board on compliance with regulatory disclosures and the filing and payment of all taxes and statutory deductions.

External AuditorKPMG is the Company’s external auditor, and on the invita-

tion of the Audit Committee, the Lead Audit Partner attends a meeting of the Committee to present the firm’s audit findings and discuss the draft audited financial statements. The external auditor also attends the Annual General Meeting to present the audited financial statements to shareholders and was available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit report.

32


Managing RiskThe Company has several risk management policies for the

oversight and management of financial and non-financial mate-rial business risks, as well as related internal compliance systems that are designed to:

• protect the interests of stakeholders;

• safeguard the Company’s assets and maintain its reputation;

• improve the Company’s operating performance; and

• fulfil the Company’s strategic objectives.

Although the Board ultimately has responsibility for internal compliance and control, the Audit Committee is responsible for oversight of the company’s risk management and internal control framework. The Audit Committee, in conjunction with management, regularly reports to the Board on the effectiveness of the company’s management of its material business risks and whether the risk management framework and systems of internal compliance and control are operating efficiently and effectively in all material respects.

The Company’s internal audit function is outsourced to Price-waterhouseCoopers, which carries out targeted internal audits on a quarterly basis. An annual internal audit plan is presented to and approved by the Audit Committee and, generally, four times a year, the Committee receives an internal audit report. The Audit Committee reviews the company’s risk management framework annually to satisfy itself that it continues to be sound.

During the reporting period, the Audit Committee met four times, on August 25, 2017; November 13, 2017; February 12, 2018 and May 8, 2018.




Committee Chairman:

Ronald Schrager 3 75%

Committee Members:

Richard M. Hall 4 100%

Theresa Chin 4 100%


Konrad Mark Berry * 3 75%




Committee Chairman:

Richard M. Hall 2 100%

Committee Members:

Ronald Schrager 2 100%


Theresa Chin 2 100%

Christopher Berry 2 100%

Compensation CommitteeThe Compensation Committee assists the Board in fulfilling its

fiduciary responsibilities relating to the fair and competitive com-pensation of non-executive Directors, executives and other key employees of the Company, and in connection with the admin-istration of the general employee welfare plans of the company. The Compensation Committee has a solid understanding of the role of compensation in attracting, motivating and retaining senior executives in particular and all employees in general. The Committee is primarily responsible for providing recommenda-tions to the Board regarding the remuneration strategy, policies and practices applicable to non-executive Directors, the CEO, and senior management.

During the year, the Committee considered the following matters:

• An independent industry-wide salary survey undertaken by an external HR Consultant which concluded that certain categories of staff within the management and clerical teams were not being paid commensurate with the current market rate. On the basis of a recommendation from the Consultant salary increases of between 8% and 25% were proposed to the Board for these members of staff.

• A Performance Management Reporting Format that would tie into the company’s strategy to drive excellence in perfor-mance. This reporting format would support the achieve-ment of Key Performance Indicators.

• A Proposal for a revised compensation package for the CEO, aligned with the achievement of the corporate key perfor-mance indicators.

• Proposals for the annual salary increase to the general staff, as well as annual incentive gratuities to the staff and perfor-mance incentives for senior managers.

During the reporting period, the committee met twice, on August 25, 2017 and November 13, 2017 with 100% attendance of all director members.


33


Director Remuneration Remuneration for executive Directors and senior executive

management is appropriately structured for each position and individual based on the duties allocated to them, the size of the Company’s business and the industry in which the Company operates.

Fees and payments to non-executive Directors reflect the demands which are made on, and the responsibilities of, the Di-rectors. Non-executive Directors’ fees and payments are reviewed annually by the Board. Each Non-Executive Director is paid a fee of US$250.00 based on their attendance at each meeting of the Board and the committee(s) on which they serve.

The maximum aggregate amount of fees paid to non-execu-tive Directors is subject to approval by shareholders at the Annual General Meeting. The total remuneration paid to the members of the Board for the year ending June 30, 2018 is detailed below.

Name of Director Net Fees Paid (USD)

Richard M. Hall $2,062.50

Ronald Schrager $1,687.50

Robert Hooker $ 750.00

L. Camille Shields $1,500.00

Theresa Chin $1,925.00

Christopher Berry $1,125.00

Konrad Mark Berry $1,312.50

TOTAL $10,362.50

34


35


Management discussion & analysis

The Board of Directors of Caribbean Producers (Jamaica) Limited is pleased to present the consolidated financial results for the year ended June 30, 2018.

Caribbean Producers (Jamaica) Limited: A Proud History

During the year the company celebrated its 24th year of service to the hospitality and retail trade sectors. The company continues to be recognized as the market leader with strong food and beverage service relationships. CPJ has been awarded the purveyor of choice ten times by the Jamaica Hotel and Tourism Association (JHTA). It is the top distributor of food, non-food, beverages, wine and spirits as well as a leading manufacturer of meats & juices sold both locally and throughout the Caribbean.

The company’s headquarters is domiciled in Montego Freeport, St. James. The main hub of the business encompasses 125,000 sq. ft with additional satellite warehousing space of 20,000 sq. ft. An additional 56,000 sq. ft. state of the art warehousing space is slated to be commissioned during the next financial year.

CPJ has been manufacturing juice concentrate and slush specifically for the hotel industry since 1999, expanding to retail trade under the Cariburst® brand fourteen years later. The com-pany was listed on the Jamaica Junior Stock Exchange (JSE) on July 20th, 2011, in line with its vision to expand into new ventures and markets. In 2012, CPJ opened in Kingston, the CPJ Market, Deli and CRU Bar + Kitchen. CPJ began processing and distrib-uting its own branded meat products including hamburgers, sausages, bacon and ready-to-cook pork products in 2013. In 2014, the company formed CPJ St. Lucia, a joint venture with the Duboulay family, former owners of the Duboulay Bottling Com-pany. CPJ St. Lucia began operating a 25,000 sq. ft. warehouse in Castries as a food service distributor, selling products, including produce, primarily to the St. Lucian tourism sector.

Today, CPJ exclusively distributes internationally renowned wine and spirit brands, such as Rémy Cointreau, Yellow Tail, Con-cha y Toro, Francis Ford Coppola and Jackson Family Wines, Jack Daniels, Patron in addition to the full range of Bacardi products including Grey Goose and Dewar’s White Label. In the beverag-es category, CPJ distributes premium beverages Bellot and Fiji

36


Water island-wide. Lifespan water, exclusively distributed by CPJ, has been well-received in local trade, gaining significant market share. Kerrygold is a key food brand for CPJ, as its cheese and butter products build a strong reputation in the cold box of the retail trade.

Market ConditionsThe Jamaican economy experienced volatility throughout the

year with significant fluctuations in the J$:US$ exchange rate. Despite significant month on month fluctuations in the exchange rate, the company effectively aligned its prices to remain compet-itive and limited the impact on gross profit by only 1%.

Gross Revenue For the financial year ended June 30, 2018 the group achieved

record gross revenues of US$107.8M which was an increase of 10% when compared to prior year. The notable increase can be attributed to aggressive marketing and pricing strategies; in-crease in tourist arrivals over the last fiscal year; increased sales in the key frozen and chilled food categories and the introduction of new products in the overall portfolio of offerings. In-line with the growth of revenues was an increase in the cost of operating reve-nue which increased by US$8.21M (12%). The movement in both revenue and cost of operating revenue resulted in a US$1.29M (5%) increase in gross profit.

There was strong growth recorded over the first three (3) quar-ters which was followed by a softer than expected fourth quarter. This was directly due to the unforeseen challenges arising from the launch and integration of a new IT software platform. The transition to the new IT platform impacted our logistics opera-tions and disrupted our service capacity and consequently our sales for the last two (2) months of the fiscal year.

June 2018 YTD June 2017 YTD Change % Change

US$’000 US$’000 US$’000

Gross Revenue 107,796 98,289 9,507 10%

Gross Profit 28,428 27,133 1,295 5%

Gross Profit % 27% 28% -1%

Operating Expenses 21,659 19,873 (1,786) -9%

EBIDTA 6,768 7,260 (492) -7%

Finance Cost, Net, Depreciation & Taxation 4,458 4,671 213 5%

Non-controlling interest 212 35 177 506%

Net Profit - Equity Holders 2,098 2,555 (457) -18%

Operating ExpensesThe company employed cost containment strategies through-

out the year, however there was an increase in operating costs of US$1.84M (8%) when compared to the same period prior year. There was a notable increase of US$1.91M in selling and admin-istrative expenses from last year increasing from US$20.0M to US$21.95M. The adverse trend was offset by a favourable reduc-tion in depreciation of US$0.18M (7%).

The increase in costs were primarily attributable to the increase in distribution and selling costs to meet the increased demand for company’s products; growth in advertising and mar-keting for customer awareness and to increase revenue; increase in salary costs due to redundancies and new hires; and increase in shrinkage which was directly due to slower rotation resulting from challenges with the IT platform.

Financial Highlights Subsidiary is represented in these figures.

Gross Operating RevenueGross operating revenue grew by 37.08% from US$78.64M in 2014 to

US$107.80M in fiscal year 2018. The gross operating revenue reflects a 9.7% increase for the year over the previous year, and is significant when compared to prior year’s growth over the previous year’s growth of 4.5%. The compound annual growth rate (CAGR) over the last five years is 6.5%. The Group’s revenue growth has been steady over the five-year period. This was achieved through organic and inorganic growth, by expanding into the Caribbean region with its subsidiary CPJ St. Lucia hence increasing its customer base; setting up a food processing plant and growing its sales in the retail trade by adding new categories of products and growing its product offerings.

Operating ExpensesSelling and Administration Expenses increased from US$15.85M to

US$22.19M or 40.0% for the 5-year period. Cost of Operating Revenue increased from US$55.81M to US$79.13M or a 41.8% increase. There was a 11.2% increase in cost of operating revenue from the previous year consistent with the increase in revenue. Operating Expenses increased by a CAGR of 6.72% over the last five years. The subsidiary, food processing and expansion in the retail division were the primary reasons for the noted change.

FIVE-year review

EBITDA Earnings before Interest, Taxes and Depreciation

Earnings before Interest, Taxes and Depreciation decreased from US$6.97M in financial year 2014 to US$6.77M in financial year 2018. The year 2018 shows a net profit of US$2.31M which is slightly lower than the corresponding period last year of US$2.58M. The company entered the Junior Stock Ex-change on July 20th, 2011 and as such enjoys a 10-year tax benefit as follows:

Years 1 - 5 100%

Years 6 - 10 50%

Important Ratios 2018 2017 2016 2015 2014

Debt to Ratio Equity 1.47 1.50 1.90 1.82 1.91

Return on Equity 9.8% 11.8% 5.5% 18.3% 21.4%

Profit before Taxation/Sales 2.45% 2.9% 0.77% 3.8% 4.4%

Return on Asset 4.00% 4.7% 1.88% 6.5% 7.4%

Current Ratio 2.50 2.69 2.22 2.34 2.19

Earnings per Stock Unit (US Cents) 0.19 0.23 0.10 0.32 0.31

Weighted Avg. Exchange Rate J$:U$ 130.33 128.62 126.08 116.67 112.20

2014 2015 2016 2017 2018

2014 2015 2016 2017 2018

2014 2015 2016 2017 2018

78.64

6.97 7.13

4.87

7.10 6.77

15.85

55.81 62

.13 69.00 71.16

17.59 20.24

20.04 22.19

79.13

86.85 94.10 98.29107.80

37


38


Recruitment & StaffingOver the past fiscal year, we continued to align our team

with the new strategic course. CPJ’s compensation and benefits policy remains competitive and in line with industry standards. The company continues to recruit, develop and retain talent to strengthen our team.

A Great Place to WorkCPJ prides itself in a holistic approach to employee well-

ness taking into consideration the mental, physical, and finan-cial health of our employees and their families. In Fiscal Year 2017/2018, CPJ engaged several partners to provide for the well-being of our valued team members:

• Billy Craig- height, weight, cholesterol, blood sugar, vision checks

• Cornmed Pharmacy- quarterly promotion/give away for staff

• Courts Optical- free eye testing

• Flow Jamaica- Convenience of signing up for service, pur-chase phone and internet bundles

• Hanover Coop Credit Union

• Heart Trust NTA- enrolment, promotion of courses offered

• JMMB

• Maxies Department Store- Back to school promotion/sale to staff

• Mona School of Business

• National Blood Transfusion Service- Blood Drive (March 2018)

• National Health Fund (NHF) enrolling new members, provid-ing information

• National Housing Trust (NHT)

• Sagicor

• Sangsters’ Bookstore- Back to school promotion

• St James Health- free testing HIV, Syphilis

• Total Therapy- Spa Day for employees- rejuvenating of the body

Human Resources Report

The company’s greatest asset is its people. CPJ’s Human Resources Department works assiduously to fulfil

the company’s mandate of ensuring that the best people with the best fit are within the organisation. Our

focus is to motivate and empower our workforce to peak performance, to achieve our company mission of

providing the highest levels of service to our customers.

• Toyota Jamaica

• Urban Bookstore

• Victoria Mutual Bank

• Edu Com Cooperative Credit Union

Staff facilities at CPJ include a Fitness Centre and Cafeteria to keep team members healthy and energised.

Training & DevelopmentOngoing training and development is an important part of

working at CPJ. The HR department aims to create more aware-ness and greater sensitivity to workplace issues. Under our updated business model, in the new fiscal year we will focus on developing talent and consistent training of staff to uphold industry best practices across the company. Key training offered and undertaken by CPJ employees over the year include:

• Cyber Security & Occupational Health & Safety

• Food Handlers’ Clinics

• Customer Service Training

• HACCP Food Safety System for the Warehouse & Distribu-tion Centre including Product recall training.

• International Food Safety & Quality Network (IFSQN) Online Webinars – including Food Safety Fridays

39


Department of the Year 2017/2018: General Accounts

Incorporating technology in Human Resources

For Fiscal Year 2017/2018 the Human Resources department benefited from the full imple-mentation of the multi-functional cloud-based HR software that effectively transformed previ-ous processes to paperless. This software is improving employee onboarding, company transpar-ency and scalability of corporate initiatives fulfilling our varied HR needs, streamlining our processes and generating the reports nec-essary for long term planning. A Cross-Functional Steering Commit-tee was engaged to integrate the online job application process into this system, making it more agile and accessible.

Wine and Spirit Education Trust (WSET) TrainingIn the last Fiscal year, CPJ’s Sales and Marketing Team received Level 2 training from the

Wines and Spirit Educational Trust. The training provided theoretical and practical learning on the production, key labelling terminology and major classifications of wines and spirits.

Caribbean Producers (Jamaica) Limited - Audited Financial Statements40

EducationCPJ Scholarship and Book List Programme is geared exclu-

sively to the children of company employees, who have excelled academically and express a desire to succeed in their chosen field. Over the fiscal year we awarded just under $2 Million JMD to 67 recipients for our Scholarship and Book List programmes.

Youth DevelopmentThe Rose Heights Basic School was the recipient of CPJ’s efforts

on Labour Day where the team of employees carried out con-struction and maintenance work as part of their Labour Day 2018 project. The group was joined by members of the Parent\ Teach-ers’ Association and community volunteers where they repainted the building’s exterior walls and veranda, built and painted access gates, fixed a deteriorated manhole and planted flowers and trees for beautification.

HealthCPJ staff were out and gave full support to the Committee

for the Upliftment of the Mentally Ill (CUMI) 5K and 10K Fun Run hosted at Tryall Club each year.

Employee of the Year 2017/2018: Kaydean Webster (Logistics Department)

Caribbean Producers (Jamaica) Limited - Audited Financial Statements 41

Corporate Social Responsibility

42


The competitive advantage of Jamaica’s tourism product is centred on its natural resources. As a part of its activities for Fiscal Year 2017/2018, the

company supported environmental awareness cam-paigns through partnerships with Non-Governmental Organisations such as Montego Bay Marine Park and White River Fish Sanctuary. The Montego Bay Marine Park specialises in educational activities geared towards conservation and marine protection for children in St. James, Trelawny and Hanover.

As a method of engaging Consumers and Custom-ers, CPJ launched two national cause related marketing activities for the period under review.

• CPJ Golden Hope Programme: For every item of Kerrygold sold for the months of December 2017 and January 2018, CPJ donated $10 JMD to the Glenhope Place of Safety in Kingston and Melody Girls Home in Montego Bay.

• I-Lah’s Lemonade Stand: CPJ donated lemonade to the Foundation of young Imani-Leigh who in turn donated proceeds from the sales of her prod-uct to charities associated with early childhood education

The Way ForwardDuring Fiscal year 2017/2018, CPJ reviewed its prog-

ress towards the implementation of defined policies for Corporate Social Responsibility, Corporate Philan-thropy and Sustainability in line with international best practices.

The Board of Directors, at its Annual Strategy Plan-ning meeting held in June 2018, considered and agreed to revising the company’s corporate philanthropy to focus on the following strategic areas:

• Marine conservation and environmental education

• Secondary and tertiary scholarships

• Internship programmes in agri-business

• Support for children’s homes and places of safety

• Education on best practices in farming.

• Water conservation initiatives

• In-kind contributions to recognised charities

• Health and Wellness Programmes

The new Corporate Social Responsibility, Sustainabil-ity and Corporate Philanthropy policies will be rolled out in Fiscal Year 2018/2019.

A focus on child welfare and sustainability

43


I-Lah’s Lemonade Stand

44


square feet of warehouse space that will be added with new expansion.56,000

45


Audited Financial Statements


Caribbean Producers (Jamaica) Limited

Year ended June 30, 2018 ( Presented in United States dollars)

Statement of Financial Position


9 CARIBBEAN PRODUCERS (JAMAICA) LIMITED Statement of Profit or Loss and Other Comprehensive Income Year ended June 30, 2018 (Presented in United States dollars)

The accompanying notes form an integral part of the financial statements.

Notes Group Company 2018 2017 2018 2017 Gross operating revenue 17 107,795,501 98,288,970 93,306,931 86,747,239 Cost of operating revenue 18(a) ( 79,367,737) (71,155,666) (68,312,666) (62,099,795) Gross profit 28,427,764 27,133,304 24,994,265 24,647,444 Selling and administration expenses 18(b) ( 21,949,403) (20,036,435) (19,498,758) (17,901,685) Depreciation and amortisation 11,12 ( 2,460,328) ( 2,641,917) ( 2,108,914) ( 2,323,789) Other operating income, net 19(a) 290,054 163,448 259,155 70,011 Operating profit 4,308,087 4,618,400 3,645,748 4,491,981 Finance income 19(b) 882 953 882 953 Finance costs 19(c) ( 1,670,924) ( 1,762,143) ( 1,628,669) ( 1,741,325) Profit before taxation 2,638,045 2,857,210 2,017,961 2,751,609 Taxation 20 ( 327,439) ( 267,563) ( 140,273) ( 232,866) Profit for the year, being total comprehensive income $ 2,310,606 2,589,647 1,877,688 2,518,743 Attibutable to: Shareholders 2,098,476 2,554,904 1,877,688 2,518,743 Non-controlling interest 212,130 34,743 - - $ 2,310,606 2,589,647 1,877,688 2,518,743

Earnings per stock unit (cents) 21 0.19¢ 0.23¢ 0.17¢ 0.23¢



Statement of Profit or Loss and Other Comprehensive Income


10 CARIBBEAN PRODUCERS (JAMAICA) LIMITED Statement of Changes in Equity Year ended June 30, 2018 (Presented in United States dollars)


Group Non- Share Accumulated controlling capital surplus interest Total (note 13)

Balances at June 30, 2016 4,898,430 14,475,108 (106,579) 19,266,959

Profit for the year, being total comprehensive income - 2,554,904 34,743 2,589,647 Balances at June 30, 2017 4,898,430 17,030,012 ( 71,836) 21,856,606 Transaction recorded directly in equity: Dividends (note 24) - ( 521,739) - ( 521,739) Profit for the year, being total comprehensive income - 2,098,476 212,130 2,310,606 Balances at June 30, 2018 $4,898,430 18,606,749 140,294 23,645,473 Company

Balances at June 30, 2016 4,898,430 14,602,781 - 19,501,211

Profit for the year, being total comprehensive income - 2,518,743 - 2,518,743 Balances at June 30, 2017 4,898,430 17,121,524 - 22,019,954 Transaction recorded directly in equity: Dividends (note 24) - ( 521,739) - ( 521,739) Profit for the year, being total comprehensive income - 1,877,688 - 1,877,688 Balances at June 30, 2018 $4,898,430 18,477,473 - 23,375,903



Statement of Changes in Equity


11 CARIBBEAN PRODUCERS (JAMAICA) LIMITED Statement of Cash Flows Year ended June 30, 2018 (Presented in United States dollars)


Notes Group Company 2018 2017 2018 2017 CASH FLOWS FROM OPERATING ACTIVITIES Profit for the year 2,098,476 2,554,904 1,877,688 2,518,743 Adjustments for: Depreciation and amortisation 11, 12 2,460,328 2,641,917 2,108,914 2,323,789 Loss/(gain) on disposal of property, plant and equipment 19(a) 41,935 ( 37,408) 41,935 ( 37,408) Transfer and adjustment to property, plant and equipment ( 6,798) 55,346 ( 6,798) 55,346 Interest income 19(b) ( 882) ( 953) ( 882) ( 953) Interest expense 19(c) 1,670,924 1,762,143 1,628,669 1,741,325 Non controlling interest 212,130 34,743 - - Taxation 20 327,439 267,563 140,273 232,866

6,803,552 7,278,255 5,789,799 6,833,708 (Increase)/decrease in current assets: Accounts receivable ( 1,306,169) ( 748,876) ( 884,200) ( 459,177) Inventories ( 1,281,115) ( 358,901) ( 588,156) 199,409

Increase/(decrease) in current liability: Accounts payable 2,853,972 ( 730,759) 2,474,843 ( 859,792)

Cash generated from operations 7,070,240 5,439,719 6,792,286 5,714,148

Interest paid ( 1,627,044) ( 1,779,241) ( 1,584,789) ( 1,758,423) Tax paid ( 613,841) ( 73,271) ( 582,930) ( 71,119)

Net cash provided by operating activities 4,829,355 3,587,207 4,624,567 3,884,606

CASH FLOWS FROM INVESTING ACTIVITIES Interest in subsidiary - - ( 43,676) ( 22,962) Additions to property, plant and equipment and intangible asset 11, 12 ( 2,613,999) ( 1,433,059) ( 1,825,347) ( 1,188,047) Proceeds from disposal of property, plant and equipment 42,962 122,033 42,962 122,033 Interest received 882 953 882 953

Net cash used by investing activities ( 2,570,155) ( 1,310,073) ( 1,825,179) ( 1,088,023)

CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid ( 521,739) - ( 521,739) - Promissory notes received 1,442 104,973 1,442 104,973 Promissory notes repaid ( 1,000,000) ( 802,983) ( 1,000,000) ( 802,983) Long-term/short-term borrowings received 12,668,254 9,458,366 12,668,254 9,458,366 Due to related company ( 7,801) 3,240 - - Long-term/short-term borrowings repaid (12,939,675) (12,525,601) (12,910,112) (12,515,029)

Net cash used by financing activities ( 1,799,519) ( 3,762,005) ( 1,762,155) ( 3,754,673)

Net increase/(decrease) in cash and cash equivalents 459,681 ( 1,484,871) 1,037,233 ( 958,090)

Cash and cash equivalents at beginning of the year 2,520,046 4,004,917 2,712,714 3,670,804

CASH AND CASH EQUIVALENTS AT END OF THE YEAR 2,979,727 2,520,046 3,749,947 2,712,714 Comprised of:

Cash and cash equivalents 3,756,720 2,763,268 3,749,947 2,712,714 Bank overdraft ( 776,993) ( 243,222) - -

2,979,727 2,520,046 3,749,947 2,712,714



Statement of Cash Flows


12 CARIBBEAN PRODUCERS (JAMAICA) LIMITED Notes to the Financial Statements Year ended June 30, 2018 (Presented in United States dollars)

1. Identification Caribbean Producers (Jamaica) Limited (“company” or “parent company”) is incorporated under

laws of and domiciled in Jamaica. Its registered office is situated at Shop No. 14, Montego Freeport Shopping Centre, Montego Bay, St. James and its principal place of business is at 1 Guinep Way, Montego Freeport, Montego Bay, St. James.

The company’s principal activities during the year were the wholesale and distribution of food

and beverages, the distribution of non-food supplies and the manufacture and distribution of fresh juices and meats.

The company’s shares are listed on the Junior Market of the Jamaica Stock Exchange. The company and its subsidiaries are collectively referred to as “the group”.

The company holds 100% of the issued share capital of CPJ Investments Limited, a company incorporated on September 16, 2013. CPJ Investments Limited’s principal activity is holding a 51% investment in CPJ (St. Lucia) Limited, a company whose principal activity is the wholesale and distribution of food and beverages and the distribution of non-food supplies. Both companies are incorporated and domiciled in St. Lucia.

2. Statement of compliance, basis of preparation and significant accounting policies (a) Statement of compliance:

The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and their interpretations issued by the International Accounting Standards Board, and comply with the provisions of the Jamaican Companies Act. Standards issued that became effective during the year Certain new and amended standards came into effect during the current financial year. The adoption of these standards and amendments to standards did not result in any significant change to the presentation and disclosures in the financial statements. Standards issued but not yet effective

Certain new and amended standards have been issued which are not yet effective for the current year and which the group has not early-adopted. The group has assessed the relevance of all such new standards and amendments to standards with respect to the group’s operations and has determined that the following are likely to have an effect on the financial statements.



Notes to the Financial Statements


13 CARIBBEAN PRODUCERS (JAMAICA) LIMITED Notes to the Financial Statements (Continued) June 30, 2018 (Presented in United States dollars)

2. Statement of compliance, basis of preparation and significant accounting policies (cont’d)

(a) Statement of compliance (cont’d):

Standards issued but not yet effective (cont’d)

IFRS 9 Financial Instruments, which is effective for annual reporting periods beginning on or after January 1, 2018, replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial assets and liabilities, including a new expected credit loss model for calculating impairment of financial assets and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. Although the permissible measurement bases for financial assets – amortised cost, fair value through other comprehensive income (FVOCI) and fair value though profit or loss (FVTPL) - are similar to IAS 39, the criteria for classification into the appropriate measurement category are significantly different. IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ model, which means that a loss event will no longer need to occur before an impairment allowance is recognised.

The Group has examined the effects of IFRS 9 in order to determine the qualitative and quantitative impacts of the implementation. The Group considers that the overall impact of the implementation of IFRS 9 will not have a significant impact on the financial statements of the Group.

IFRS 15 Revenue From Contracts With Customers, effective for annual reporting

periods beginning on or after January 1, 2018 and replaces IAS 11 ConstructionContracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfer of Assets from Customers and SIC-31 Revenue, Barter Transactions Involving Advertising Services. It does not apply to insurance contracts, financial instruments or lease contracts, which fall in the scope of other IFRSs. It also does not apply if two entities in the same line of business exchange non-monetary assets to facilitate sales to other parties.

The group will apply a five-step model to determine when to recognise revenue, and at what amount. The model specifies that revenue should be recognised when (or as) an entity transfers control of goods or services to a customer at the amount to which the entity expects to be entitled. Depending on whether certain criteria are met, revenue is recognised at a point in time, when control of goods or services is transferred to the customer; or over time, in a manner that best reflects the entity’s performance.

There will be new qualitative and quantitative disclosure requirements to describe the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Group has conducted an assessment in order to determine the qualitative and quantitative impacts of the implementation of the new revenue recognition standard. Based on this assessment, the Group does not expect a material impact due to the transition to IFRS 15.









IFRIC 22 Foreign Currency Transactions and Advance Consideration is effective for annual reporting periods beginning on or after January 1, 2018, addresses how to determine the transaction date when an entity recognises a non-monetary asset or liability (e.g. non-refundable advance consideration in a foreign currency) before recognising the related asset, expense or income. It is not applicable when an entity measures the related asset, expense or income or initial recognition at fair value or at the fair value of the consideration paid or received at the date of initial recognition of the non-monetary asset or liability. An entity is not required to apply this interpretation to income taxes or insurance contracts that it issues or reinsurance contracts held. The interpretation clarifies that the transaction date is the date on which the company initially recognises the prepayment or deferred income arising from the advance consideration. For transactions involving multiple payments or receipts, each payment or receipt gives rise to a separate transaction date. The Group is assessing the impact that this interpretation will have on its 2019 financial statements.

IFRIC 23 Uncertainty Over Income Tax Treatments, is effective for annual

reporting periods beginning on or after January 1, 2019. Earlier application is permitted. IFIC 23 clarifies the accounting for income tax treatments that have yet to be accepted by tax authorities is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12.

An entity has to consider whether it is probable that the relevant tax authority would accept the tax treatment, or group of tax treatments, that is adopted in its income tax filing.

If the entity concludes that it is probable that the tax authority will accept a particular tax treatment in the tax return, the entity will determine taxable profit (tax loss), tax bases, unused tax losses, unused tax credits or tax rates consistently with the tax treatment included in its income tax filings and record the same amount in the financial statements. The entity will disclose uncertainty

If the entity concludes that it is not probable that a particular tax treatment will be accepted, the entity has to use the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates. The decision should be based on which method provides better prediction of the resolution of the uncertainty.

If facts and circumstances change, the entity is required to reassess the judgements and estimates applied.








Standards issued but not yet effective (cont’d) IFRIC 23 Uncertainty Over Income Tax Treatments (cont’d)

IFRIC 23 reinforces the need to comply with existing disclosure requirements regarding: - judgements made in the process of applying accounting policy to determine

taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates;

- assumptions and other estimates used; and - potential impact of uncertainties that are not reflected in the financial

statements.

The Group is assessing the impact that the standard will have on its 2019 financial statements.

IFRS 16 Leases, which is effective for annual reporting periods beginning on or

after January 1, 2019, eliminates the current dual accounting model for lessees, which distinguishes between on-balance sheet finance leases and off-balance sheet operating leases. Instead, there is a single, on-balance sheet accounting model that is similar to current finance lease accounting. Companies will be required to bring all major leases on-balance sheet, recognising new assets and liabilities. The on-balance sheet liability will attract interest; the total lease expense will be higher in the early years of a lease even if a lease has fixed regular cash rentals. Optional lessee exemption will apply to short-term leases and for low-value items with a value of US$5,000 or less.

Lessor accounting remains similar to current practice as the lessor will continue to classify leases as finance and operating leases. Finance lease accounting will be based on IAS 17 lease accounting, with recognition of net investment in lease comprising lease receivable and residual asset. Operating lease accounting will be based on IAS 17 operating lease accounting.

Early adoption is permitted if IFRS 15 Revenue from Contracts with Customers, is also adopted. The Group is assessing the impact that this amendment will have on its 2020 financial statements.

Amendments to IFRS 9 Financial Instruments, effective retrospectively for annual

reporting periods beginning on or after January1, 2019 clarifies the treatment of: (i) Prepayment features with negative compensation:

Financial assets containing prepayment features with negative compensation can now be measured at amortised cost or at fair value through other comprehensive income (FVOCI) if they meet the other relevant requirements of IFRS 9.









Amendments to IFRS 9 Financial Instruments (cont’d)

(ii) Modifications to financial liabilities:

If the initial application of IFRS 9 results in a change in accounting policy arising from modified or exchanged fixed rate financial liabilities, retrospective application is required, subject to particular transitional reliefs. There is no change to the accounting for costs and fees when a liability has been modified, but not substantially. These are recognised as an adjustment to the carrying amount of the liability and are amortised over the remaining term of the modified liability.

The Group is assessing the impact that this amendment will have on its 2020 financial statements.

(b) Basis of preparation: The financial statements are prepared under the historical cost convention, and are

presented in United States dollars ($), which is the company’s functional currency.

(c) Going concern: The preparation of the financial statements in accordance with IFRS assumes that the

group will continue in operation for the foreseeable future. This means, in part, that the statements of profit or loss and other comprehensive income and the statement of financial position assume no intention or necessity to liquidate or curtail operations. This is commonly referred to as the going concern basis. Management believes that the preparation of the financial statements on the going concern basis continues to be appropriate.

(d) Use of estimates and judgements:

The preparation of the financial statements to conform with IFRS requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, contingent assets and contingent liabilities at the reporting date, and the income and expenses for the year then ended. Actual amounts could differ from those estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognised in the year in which the estimate is revised, if the revision affects only that year, or in the year of the revision and future years, if the revision affects both current and future years.

Judgements made by management in the application of IFRS that have significant effects

on the financial statements and estimates with a significant risk of material adjustments in the next financial year are discussed below:






2. Statement of compliance, basis of preparation and significant accounting policies (cont’d) (d) Use of estimates and judgements (cont’d):

(i) Allowance for impairment losses on receivables:

In determining amounts recorded for impairment losses on receivables in the financial statements, management makes judgements regarding indicators of impairment, that is, whether there are indicators that there may be a measurable decrease in the estimated future cash flows from receivables, caused for example, by default or adverse economic conditions. Management also makes estimates of the likely estimated future cash flows from impaired receivables as well as the timing of such cash flows. Historical loss experience is applied where indicators of impairment are observable on significant receivables with similar characteristics, such as credit risks.

(ii) Net realisable value of inventories:

Estimates of net realisable value are based on the most reliable evidence available, at

the time the estimates are made, of the amount the inventories are expected to realise. These estimates take into consideration fluctuations of price or cost directly relating to events occurring after the end of the year to the extent that such events confirm conditions existing at the end of the year.

Estimates of net realisable value also take into consideration the purpose for which

the inventory is held.

(iii) Judgement in evaluation of contingencies: For a contingent liability to qualify for recognition there must be a present

obligation and the probability of an outflow of economic benefits to settle that obligation. In recognising contingent liabilities of the group, management determines the possibility of an outflow of resources and makes estimates of expenditure required to settle the present obligation at the reporting date.

No provision is made if management considers the possibility of any outflow in

settlement to be remote.

(iv) Residual value and expected useful life of property plant and equipment:

The residual value and the expected useful life of an asset are reviewed at least at each reporting date, and, if expectations differ from previous estimates, the change is accounted for prospectively. The useful life of an asset is defined in terms of the asset’s expected utility to the company and its subsidiaries.






2. Statement of compliance, basis of preparation and significant accounting policies (cont’d) (e) Basis of consolidation:

(i) A “subsidiary” is an enterprise controlled by the company. The group controls an

entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of a subsidiary are included in the consolidated financial statements from the date control commences until the date that control ceases.

The consolidated financial statements include the financial statements of the company and its subsidiaries (note 1), made up to June 30, 2018.

(ii) Intra-group balances and transactions, and any unrealised gains and losses or income

and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

(iii) Business combinations are accounted for using the acquisition method as at the

acquisition date, which is the date on which control is transferred to the group. (iv) The financial statements have been prepared using uniform accounting policies for

like transactions and other events in similar circumstances. (v) Non-controlling interests are measured at their proportionate share of the acquiree’s

identifiable net assets at the acquisition date. Changes in the group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the

non-controlling interests, even if doing so causes the non-controlling interest to have a deficit balance.

(f) Cash and cash equivalents:

This comprises cash and bank balances and short-term deposits maturing within three

months or less from the date of deposit or acquisition that are readily convertible into known amounts of cash and which are not subject to significant risk of changes in value.

Bank overdrafts that form an integral part of the group’s cash management for financing

operations are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

(g) Accounts receivable:

Trade and other receivables are measured at amortised cost, less impairment losses.

(h) Inventories:

Inventories are valued at the lower of cost, determined on the weighted average basis, and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less selling expenses. The cost of raw materials, labour and appropriate allocations for overhead expenses are included in manufactured finished goods.







(i) Property, plant and equipment:

(i) Recognition and measurement:

Items of property, plant and equipment are measured at cost, less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset.

If significant parts of an item of property, plant and equipment have different useful

lives, then they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.

(ii) Subsequent expenditure: Subsequent expenditure is capitalised only if it is probable that future economic

benefits associated with the expenditure will flow to the group. (iii) Depreciation:

Depreciation is recognised in profit or loss on the straight-line basis at annual rates estimated to write down the assets to their residual values over their expected useful lives. No depreciation is charged on construction in progress.

The depreciation rates are as follows:

Leasehold improvements 6.67%, 10% and 20% Furniture, fixtures and equipment 10%, 20% and 33.33% Computer equipment 33.33% Motor vehicles 20%

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(j) Intangible asset:

Intangible asset, which represents computer software, is deemed to have a finite useful life

of three years and is measured at cost, less accumulated amortisation and impairment losses, if any.

(k) Accounts payable:

Trade and other payables are measured at amortised cost.







(l) Provisions: A provision is recognised when the group has a legal or constructive obligation as a result

of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and where appropriate, the risk specific to the obligation.

(m) Related parties:

A related party is a person or entity that is related to the entity that is preparing its financial statements (referred to in IAS 24 Related Party Disclosures, as the “reporting entity”, in this case, the group). (a) A person or a close member of that person’s family is related to the group if that

person:

(i) has control or joint control over the group; (ii) has significant influence over the group; or (iii) is a member of the key management personnel of the group or of a parent of

the group.

(b) An entity is related to the group if any of the following conditions applies:

(i) The entity and the group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party. (iv) One entity is a joint venture of a third entity and the other entity is an

associate of the third entity. (v) The entity is a post-employment benefit plan for the benefit of employees of

either the group or an entity related to the group. (vi) The entity is controlled, or jointly controlled by a person identified in (a). (vii) A person identified in (a)(i) has significant influence over the entity or is a

member of the key management personnel of the entity (or of a parent of the entity).

(viii) The entity, or any member of a group of which it is a part, provides key management personnel sevices to the group or to the parent of the group.

(c) A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged.







(n) Investments: (i) Interest in subsidiary: Interest in subsidiary is measured at cost, less provision for impairment, if any.

(ii) Loans and receivables: Loans and receivables are those that have a fixed or determinable payment and

which are not quoted in an active market. Loans and receivables investments are initially measured at cost and subsequently at amortised cost, calculated on the effective interest rate method, less impairment losses.

(o) Share capital and dividends:

Ordinary shares are classified as equity and carried at cost. Incremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are recognised as a deduction from equity. Dividends on ordinary shares are recognised as a liability in the period in which they are declared.

(p) Interest-bearing borrowings:

Interest-bearing borrowings are recognised initially at cost. Subsequent to initial recognition, interest bearing borrowings are measured at amortised cost, with any difference between cost and redemption value recognised in profit or loss over the period of the borrowing on an effective interest basis.

(q) Transaction costs:

(i) Transaction costs of share issue: Transaction costs on the issue of shares are deducted from the proceeds of the issue

of share capital to the extent the costs are directly attributable to the issue of the shares.

(ii) Debt issuance costs:

Debt issuance costs represent financing and certain related fees associated with securing long-term borrowings. Amortisation is charged to profit or loss on the effective interest basis over the life of the related borrowings.

(r) Revenue recognition:

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due or material associated costs on the possible return of goods.






2. Statement of compliance, basis of preparation and significant accounting policies (cont’d) (s) Expenses/income:

(i) Expenses: Expenses are recognised in profit or loss on the accrual basis.

(ii) Finance costs:

Finance costs comprise interest payable on borrowings calculated using the effective interest method and material bank overdraft interest.

(iii) Finance income:

Finance income comprises interest earned on funds invested and is recognised in profit or loss as it accrues, taking into account the effective yield on the asset.

(iv) Operating lease payments:

Payments made under operating leases are recognised in profit or loss on the straight-line basis over the term of the lease.

(v) Employee benefits:

Employee benefits include current or short-term benefits such as salaries, statutory contributions paid, annual vacation leave and non-monetary benefits such as medical care and housing. Short-term employee benefits are recognised as a liability, net of payments made, and charged as expenses as incurred. The expected cost of vacation leave that accumulates is recognised over the period that the employees become entitled to the leave.

(t) Taxation:

Income tax on the profit for the year comprises current and deferred tax. Taxation is recognised in profit or loss, except to the extent that it relates to items recognised directly in equity, in which case it is recognised in other comprehensive income. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the reporting date and any adjustment to tax payable in respect of previous years.

Deferred tax is provided for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted at the reporting date.

A deferred tax liability is recognised for taxable temporary differences, except to the

extent that the group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary differences will not reverse in the foreseeable future.







(t) Taxation (cont’d):

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(u) Impairment:

The carrying amounts of the group’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss.

(i) Calculation of recoverable amount: The recoverable amount of the group’s receivables is calculated as the present value

of expected future cash flows, discounted at the original effective interest rate inherent in the asset. Receivables with a short duration are not discounted.

The recoverable amount of other assets is the greater of their net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

(ii) Reversals of impairment:

An impairment loss in respect of receivables is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.

In respect of other assets, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.

(v) Operating segments:

An operating segment is a component of the group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the group’s other components and for which discrete financial information is available. An operating segment’s operating results are reviewed regularly by the Board of Directors to make decisions about resources to be allocated to the segment and assess its performance. Based on the nature of the group’s products, processes, customers and distribution systems, management has determined that disclosure of segment information is not applicable to the group.







(w) Foreign currencies:

Transactions in foreign currencies are converted at the rates of exchange ruling on the dates of those transactions. Monetary assets and liabilities denominated in other currencies at the reporting date are translated to United States dollars at the rates of exchange ruling on that date. Gains and losses arising from fluctuations in exchange rates are included in profit or loss.

For the purpose of the statement of cash flows, all foreign currency gains and losses recognised in profit or loss are treated as cash items and included in cash flows from operating or financing activities along with movements in the principal balances.

(x) Financial instruments:

A financial instrument is any contract that gives rise to a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. Financial assets have been determined to include cash and cash equivalents, accounts receivable, investments and interest in subsidiary. Financial liabilities include bank overdraft, short-term loans, accounts payable, short-term and long-term promissory notes, long-term borrowings and amounts due to related company.

(y) Determination of fair value:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Market price is used to determine fair value where an active market exists as it is the best evidence of the fair value of a financial instrument. The group’s financial instruments lack an available trading market. Further, the company has no financial instruments that are carried at fair value. The carrying value of the group’s financial instruments approximates their fair value.

3. Cash and cash equivalents Group Company 2018 2017 2018 2017 Cash 7,743 7,190 6,234 6,270 Bank balances 3,742,759 2,750,175 3,737,495 2,700,541 Deposits 6,218 5,903 6,218 5,903 3,756,720 2,763,268 3,749,947 2,712,714 Bank overdraft (a) ( 776,993) ( 243,222) - - $2,979,727 2,520,046 3,749,947 2,712,714

(a) The overdraft facility is secured by way of a guarantee and postponement of claims from a related party.

(b) The company has a multi-purpose operating line of credit in the amount of $8,500,000 which facilitates an overdraft limit of J$120 million. The overdraft is subject to interest at the bank’s base lending rate less 3% and is secured as disclosed in note 15.






4. Accounts receivable Group Company 2018 2017 2018 2017 Trade receivables (a) and (b) 11,651,440 11,559,540 9,988,991 10,292,464 Other receivables (c) 3,652,561 2,429,366 3,506,679 2,321,463 15,304,001 13,988,906 13,495,670 12,613,927 Less: Allowance for impairment losses (d) ( 89,068) ( 80,142) ( 73,264) ( 75,721) $15,214,933 13,908,764 13,422,406 12,538,206

(a) Trade receivables include due from directors amounting to $9,374 (2017: $8,370) for the group and the company; and $214,231 (2017: $178,743) due from related companies, which are controlled by directors for the group and the company.

(b) The aging of trade receivables at the reporting date was: Group

2018 2017 Gross Impairment Gross Impairment

Not past due 7,502,139 - 9,019,127 - Past due 31- 60 days 2,651,685 - 1,792,278 - More than 60 days 1,497,616 89,068 748,135 80,142

$11,651,440 89,068 11,559,540 80,142

Company 2018 2017

Gross Impairment Gross Impairment

Not past due 6,336,651 - 7,862,960 - Past due 31- 60 days 2,478,545 - 1,665,757 - More than 60 days 1,173,795 73,264 763,747 75,721

$9,988,991 73,264 10,292,464 75,721 (c) Other receivables include due from directors amounting to $9,848 (2017: $10,930) for the

group and the company; and $18,605 (2017: $34,843) due from related companies, which are controlled by directors for the group and the company.

(d) The movement in allowance for impairment in respect of trade receivables during the year

was as follows: Group Company 2018 2017 2018 2017

Balance at beginning of year 80,142 100,365 75,721 97,157 Amounts written off (51,129) (174,089) (48,771) (161,862) Amount provided during the year

[note 18(b)] 60,055 153,866 46,314 140,426 Balance at end of year $89,068 80,142 73,264 75,721






5. Inventories Group Company 2018 2017 2018 2017 Goods held for resale – duty paid 17,022,561 17,409,950 13,973,320 15,080,431 Goods held in bonded warehouse 786,549 740,762 182,686 203,396 Goods in transit 5,236,655 4,244,331 4,685,632 3,581,015 Raw materials 2,250,720 1,660,869 2,236,183 1,646,421 Others 609,977 569,435 499,349 477,751 $25,906,462 24,625,347 21,577,170 20,989,014

During the year, expenses relating to inventory write-offs amounted to $2,020,422 (2017: $1,693,520) for the group and $1,808,142 (2017: $1,439,672) for the company.

6. Short-term loans Group and Company 2018 2017 The Bank of Nova Scotia Jamaica Limited loans 1,700,000 2,500,000

These are US$ revolving loans that bear interest at 4.25% and are secured as disclosed in note 15.

7. Accounts payable Group Company 2018 2017 2018 2017 Trade payables (a) 7,954,102 5,223,571 6,666,005 4,187,988 Other payables (b) 2,180,825 2,013,504 1,808,041 1,767,335 $10,134,927 7,237,075 8,474,046 5,955,323

(a) Trade payables include due to related companies, which are controlled by directors amounting to $246,015 (2017: $445,074) for the group and $127,707 (2017: $159,419) for the company.

(b) Other payables include $42,759 (2017: $56,119) due to related companies for the group

and the company which are controlled by directors.






8. Short-term promissory notes Group and Company

2018 2017 8% related company loan 750,000 750,000 8% related party loans 1,858,333 1,858,333 7% related party loan 1,563,333 1,563,333 6% related party loan 146,128 146,128 $4,317,794 4,317,794

(a) These US$ promissory notes are unsecured and repayable with three months notice to the company.

(b) The related company is controlled by directors.

9. Interest in subsidiary

(a) The details of the company’s subsidiaries as at June 30, 2018 are as follows: Percentage of ordinary Place of

Company Principal activity shares held by company incorporation CPJ Investments Limited Holds investment in CPJ (St. Lucia) Limited 100 St. Lucia CPJ (St. Lucia) Limited See note 1 51 St. Lucia

(b) Interest in subsidiary comprises:

Company 2018 2017

Shares, at cost 10,000 10,000 Advances (see note below) 3,037,948 2,994,272 $3,047,948 3,004,272 These advances are interest-free, unsecured and have no fixed repayment terms. However, the company’s intent is not to require repayment within 12 months of the reporting date.

10. Deferred tax asset

The deferred tax asset is attributable to differences in tax and financial statement reporting in respect of the following: Group Recognised Recognised

2016 in income 2017 in income 2018 [note 20(a)] [note 20(a)] Accounts payable 49,050 ( 50) 49,000 13,494 62,494 Unrealised foreign exchange gains ( 2,509) ( 17,491) ( 20,000) 4,610 ( 15,390) Tax effect of losses carried forward 287,740 ( 16,395) 271,345 (103,006) 168,339 Property, plant and equipment 253,874 243,072 496,946 242,913 739,859 $588,155 209,136 797,291 158,011 955,302






10. Deferred tax asset (cont’d)

Company Recognised Recognised

2016 in income 2017 in income 2018 [note 20(a)] [note 20(a)] Accounts payable 49,050 ( 50) 49,000 13,494 62,494 Unrealised foreign exchange gains ( 2,509) ( 17,491) ( 20,000) 4,610 ( 15,390) Property, plant and equipment 444,325 240,675 685,000 224,067 909,067 $490,866 223,134 714,000 242,171 956,171 11. Property, plant and equipment

Group Furniture, Leasehold fixtures and Computer Motor Construction improvements equipment equipment vehicles in progress Total Cost: June 30, 2016 9,397,780 12,107,257 1,974,415 2,182,337 56,257 25,718,046 Additions 53,237 778,512 123,509 259,216 111,289 1,325,763 Disposals - ( 250,231) - ( 567,664) - ( 817,895) Transfer - - - - ( 23,181) ( 23,181) Adjustment - - 8,365 - ( 33,076) ( 24,711)

June 30, 2017 9,451,017 12,635,538 2,106,289 1,873,889 111,289 26,178,022 Additions 116,534 768,117 374,868 84,115 692,757 2,036,391 Disposals ( 74,892) ( 54,092) ( 84,935) ( 225,360) - ( 439,279) Adjustment ( 391) 7,189 - - - 6,798

June 30, 2018 9,492,268 13,356,752 2,396,222 1,732,644 804,046 27,781,932

Depreciation: June 30, 2016 4,283,249 4,939,435 1,553,661 1,276,154 - 12,052,499 Charge for the year 852,924 1,200,705 256,152 216,035 75,861 2,601,677 Disposals - ( 221,200) - ( 512,070) - ( 733,270) Adjustment 297 7,157 - - - 7,454

June 30, 2017 5,136,470 5,926,097 1,809,813 980,119 75,861 13,928,360 Charge for the year 671,519 1,221,218 209,733 328,791 - 2,431,261 Disposals ( 18,099) ( 45,803) ( 72,371) ( 218,109) - ( 354,382)

June 30, 2018 5,789,890 7,101,512 1,947,175 1,090,801 75,861 16,005,239

Net book values: June 30, 2018 $3,702,378 6,255,240 449,047 641,843 728,185 11,776,693

June 30, 2017 $4,314,547 6,709,441 296,476 893,770 35,428 12,249,662






11. Property, plant and equipment (cont’d)

Company Furniture, Leasehold fixtures and Computer Motor Construction improvements equipment equipment vehicles in progress Total Cost: June 30, 2016 8,727,103 10,641,738 1,901,945 1,853,932 56,257 23,180,975 Additions 50,093 766,512 118,541 136,531 9,074 1,080,751 Disposals - ( 250,231) - ( 567,664) - ( 817,895) Transfer - - - - ( 23,181) ( 23,181) Adjustment - - 8,365 - ( 33,076) ( 24,711)

June 30, 2017 8,777,196 11,158,019 2,028,851 1,422,799 9,074 23,395,939 Additions 99,671 719,211 323,209 - 110,839 1,252,930 Disposals ( 74,892) ( 54,092) ( 84,935) ( 225,360) - ( 439,279) Adjustment ( 391) 7,189 - - - 6,798

June 30, 2018 8,801,584 11,830,327 2,267,125 1,197,439 119,913 24,216,388

Depreciation: June 30, 2016 4,226,856 4,677,567 1,529,391 1,161,629 - 11,595,443 Charge for the year 785,609 1,068,381 241,273 196,980 - 2,292,243 Disposals - ( 221,200) - ( 512,070) - ( 733,270) Adjustment 297 7,157 - - - 7,454

June 30, 2017 5,012,762 5,531,905 1,770,664 846,539 - 13,161,870 Charge for the year 603,513 1,058,218 189,401 230,743 - 2,081,875 Disposals ( 18,099) ( 45,803) ( 72,371) ( 218,109) - ( 354,382)

June 30, 2018 5,598,176 6,544,320 1,887,694 859,173 - 14,889,363

Net book values: June 30, 2018 $3,203,408 5,286,007 379,431 338,266 119,913 9,327,025

June 30, 2017 $3,764,434 5,626,114 258,187 576,260 9,074 10,234,069

12. Intangible asset Computer software Group Company

Cost: June 30, 2016 107,202 81,117 Addition 107,296 107,296

June 30, 2017 214,498 188,413 Addition 577,608 572,417

June 30, 2018 792,106 760,830

Amortisation: June 30, 2016 15,708 - Charge for the year 40,240 31,546

June 30, 2017 55,948 31,546 Charge for the year 29,067 27,039

June 30, 2018 85,015 58,585

Carrying amount: June 30, 2018 $707,091 702,245

June 30, 2017 $158,550 156,867






13. Share capital

Group and Company 2018 2017 Authorised: 176,000,000,000 ordinary shares of no par value Stated capital, issued and fully paid: 1,100,000,000 ordinary shares of no par value 5,117,611 5,117,611 Less: Transaction costs of share issue ( 219,181) ( 219,181) $4,898,430 4,898,430 14. Long-term promissory notes

Group and Company 2018 2017 Due to related companies: 6% loan 100,000 100,000 8% loan 1,500,000 2,500,000 9% loan [see note 15] 6,000,000 6,000,000 Due to related company: Non-interest bearing loans 650,000 650,000 Due to third party: 8% loan 19,110 17,668 $8,269,110 9,267,668

(a) These US$ loans are unsecured and not repayable before June 30, 2018. (b) Related companies are controlled by directors.






15. Long-term borrowings Group Company 2018 2017 2018 2017 9.5% Bonds (a)(i) - 2,620,064 - 2,620,064 8% Bonds (a)(ii) 3,834,597 - 3,834,597 - 10.5% Sagicor Bank Jamaica Limited [J$6,518,329 (2017: J$8,395,173)] (b) 49,990 65,270 49,990 65,270 10.9% Sagicor Bank Jamaica Limited [J$9,709,770 (2017: J$12,144,828)] (c) 74,466 94,422 74,466 94,422 10.9% Sagicor Bank Jamaica Limited [J$3,054,398 (2017: J$4,239,439)] (d) 23,425 32,960 23,425 32,960 10.5% Sagicor Bank Jamaica Limited [J$1,584,591 (2017: J$2,040,847)] (e) 12,153 15,867 12,153 15,867 8% Royal Bank of Canada (f) - 11,552 - - 8% Royal Bank of Canada (g) - 18,011 - - 9.25% Bank of Nova Scotia Jamaica Limited [J$103,012,483 (2017: J$117,728,651)] (h) 747,700 924,835 747,700 924,835 4.75% Bank of Nova Scotia Jamaica Limited (i) 1,325,000 1,616,666 1,325,000 1,616,666 9.5% Bank of Nova Scotia Jamaica Limited [J$19,230,800 (2017: J$23,846,192)] (j) 147,431 185,396 147,431 185,396 10% Bank of Nova Scotia Jamaica Limited [J$16,666,648 (2017: J$20,666,656)] (k) 127,820 160,676 127,820 160,676 9.5% Bank of Nova Scotia Jamaica Limited [J$4,720,196 (2017: J$5,809,472)] (l) 36,200 45,167 36,200 45,167 9.5% Bank of Nova Scotia Jamaica Limited [J$2,273,323 (2017: J$3,153,319)] (m) 17,435 24,516 17,435 24,516 9% Bank of Nova Scotia Jamaica Limited [J$3,828,000 (2017: J$5,220,000)] (n) 29,358 40,584 29,358 40,584 8.75% Bank of Nova Scotia Jamaica Limited [J$5,375,000 (2017: J$6,875,000)] (o) 41,222 53,451 41,222 53,451 6,466,797 5,909,437 6,466,797 5,879,874 Less: Current portion ( 615,127) ( 475,310) ( 615,127) ( 464,771)

5,851,670 5,434,127 5,851,670 5,415,103

Debt issuance costs: (p) At beginning of the year ( 80,147) ( 108,544) ( 80,147) ( 108,544) Additional costs incurred in the year ( 68,149) ( 53,086) ( 68,149) ( 53,086) Debt costs amortised during the year 39,368 81,483 39,368 81,483

At the end of the year ( 108,928) ( 80,147) ( 108,928) ( 80,147)

$5,742,742 5,353,980 5,742,742 5,334,956

(a) (i) On April 29, 2013, the company authorised the private placement by way of an exempt distribution under the Guidelines for Exempt Distributions (Guidelines SR-GUID-08/05-0016) of a series of 5-year promissory Bonds (“the Bonds”) denominated in Jamaican dollars (“J$”) for an aggregate principal amount of up to J$500,000,000 of which $337,000,000 was subscribed. The bonds were secured by 5 year demand debentures over fixed and floating assets of the company. The bonds were repaid during the year.

(ii) On April 27, 2018, the company authorised the private placement by way of an exempt distribution under the Guidelines for Exempt Distributions (Guidelines SR-GUID-08/05-0016) of a series of 5-year unsecured promissory Bonds (“the Bonds”) denominated in Jamaican dollars (“J$”) for an aggregate principal amount of J$500,000,000.






15. Long-term borrowings (cont’d) (b) This represents the balance due on an initial loan of J$13,195,000. The loan is repayable

in eighty-four monthly instalments of principal and interest of J$222,477; the final instalment being due in April 2021.

(c) This represents the balance due on an initial loan of J$17,768,000. The loan was

repayable in eighty-four monthly instalments of principal and interest of J$303,298; the final instalment being due in August 2021.

(d) This represents the balance due on an initial loan of J$6,976,000. The loan is repayable in

seventy-two monthly instalments of principal and interest of J$132,425; the final instalment being due in August 2020.

(e) This represented the balance due on an initial loan of J$2,880,006. The loan is repayable

in seventy-two monthly instalments of principal and interest of J$54,084; the final instalment being due in August 2021.

(f) This represented the balance due on an initial loan of $19,090. The loan was repayable in

fifty-three monthly instalments of $523 and was fully settled during the year.

(g) This represented the balance due on an initial loan of $26,030. The loan was repayable in sixty-three monthly instalments of $594 and was fully settled during the year.

(h) This represents the balance due on an initial loan of J$147,160,689. The applicable rate of

interest is 9.25% per annum up to July 16, 2018 and thereafter the 6 months Weighted Average Treasury Bill Yield (WATBY) rate plus 2.5% per annum (with a floor of 9% per annum), reset quarterly. The loan is repayable in sixty months and matures on July 16, 2020.

(i) This represents the balance due on an initial loan of $2,000,000. The applicable rate of

interest is 4.75% per annum up to July 16, 2018 and thereafter the 6 months LIBOR rate plus 4.35% per annum, reset quarterly. The loan is repayable in sixty months and matures on July 16, 2020.

(j) This represents the balance due on an initial loan of J$30,000,000, funded by the Development Bank of Jamaica Limited (DBJ). The DBJ’s authorised lending rate for its energy funding line is currently at 6.5% per annum, plus a commission of 3% per annum, gives an effective all-in-one interest rate of 9.5% per annum. The loan is for seven years with a six months moratorium. The principal is repayable in seventy-seven equal monthly payments of J$384,616 and one final payment of J$384,568. The loan matures on August 8, 2022.

(k) This represents the balance due on an initial loan of J$26,000,000, funded by the DBJ.

The DBJ’s authorised lending rate for its regular J$ funding line is currently at 7% per annum, plus a commission of 3% per annum, gives an effective all-in-one interest rate of 10% per annum. The principal is repayable in seventy-seven equal monthly payments of J$333,334 and one final payment of J$333,282. The loan matures on August 12, 2022.

(l) This represents the balance due on an initial loan of J$7,625,000. The applicable rate of

interest is 9.5% per annum for years 1 to 5 and thereafter the 6 months WATBY plus 3% for years 6 and 7. The loan is repayable in eighty-four months with initial principal payment of J$90,841 followed by eighty-three monthly payments of J$90,773. The loan matures on October 29, 2022.






15. Long-term borrowings (cont’d)

(m) This represents the balance due on the initial disbursement of J$4,400,000 drawn-down from the J$180,000,000 revolving term loan facility. This initial loan is repayable in fifty-nine monthly payments of J$73,333 and matures January 31, 2021. The interest rate on this initial disbursement is fixed at 9.5% per annum.

(n) This represents the balance due on an initial loan of J$6,960,000 for the purchase of two

motor vehicles. The interest rate of 9% per annum is fixed for the term. The loan is repayable in sixty monthly instalments of J$116,000; the final instalment being due in March 2021.

(o) This represent the balance due on an initial loan of J$7,500,000 for the purchase of two

motor vehicles. The interest rate of 8.75% per annum is fixed for the term. The loan is repayable in sixty monthly instalments of J$125,000; the final instalment being due in February 2022.

(p) This represents costs incurred in obtaining certain long-term borrowings. The costs are

being written off over the period of the borrowings on the effective interest basis.

The borrowings at (b) to (e) were secured as follows:

In respect of the purchase of motor vehicles; bill of sale to cover the purchase price and assignment of comprehensive insurance over the assets endorsed in favour of the bank.

The borrowings at (f) to (g) were secured by:

Bill of sale to cover the purchase price and assignment of comprehensive insurance over the assets endorsed in favor of the bank.

Letter of guarantee and postponement of claims signed by a related company (non-controlling interest) totaling $74,040.

The borrowings at (h) to (o) and short-term loans (note 6) with the Bank of Nova Scotia Jamaica Limited are primarily secured as follows:

Demand debenture stamped to cover $13,610,000 (equivalent to J$1,571,946,000), with

power to upstamp, constituting a charge over assets of the company and:

(i) Limited guarantee of a related company, supported by a first legal mortgage for $1,000,000 over certain commercial properties owned by the said related company.

(ii) Limited guarantee of another related company supported by a first legal mortgage for $2,000,000 over certain commercial properties owned by this related company.

(iii) Limited guarantee by both related companies mentioned in (i) and (ii) supported by a second legal mortgage for J$64,890,278 over commercial properties owned per (i) and (ii).

Assignment of peril insurance policy providing adequate replacement coverage over

charged assets with loss if any payable to the bank.






15. Long-term borrowings (cont’d)

Subordination and postponement agreement for $6,000,000 due to a related company (note 14).

In respect of the purchase of motor vehicles; bill of sale to cover the purchase price and assignment of comprehensive insurance over the assets endorsed in favour of the bank.

16. Related party balances and transactions

(a) The statement of financial position includes balances arising in the ordinary course of business with related parties.

The amounts due to related company are payable to non-controlling interests and are

interest-free, unsecured and have no fixed repayment terms. Other related party balances are disclosed in notes 4, 7, 8, 9 and 14.

(b) The profit for the year includes the following (income)/expense and transactions with related parties in the ordinary course of business:

Group Company 2018 2017 2018 2017 $ $ $ $ Sales to related companies/parties ( 498,721) (432,271) ( 498,721) (432,271) Sales to subsidiary - - ( 719,091) (618,969) Interest expense paid to related ` companies/parties 729,136 806,000 729,136 806,000 Rent paid to a related company 241,251 220,912 57,218 55,552 Agency fee paid to a related company 1,224,000 1,164,000 1,224,000 1,164,000 Directors’ emoluments: Fees 14,780 19,250 14,750 19,250 Management remumeration 703,074 681,214 703,074 681,214 Compensation for key management:

Short-term benefits 979,133 632,245 619,584 466,953 Related companies are controlled by directors.

17. Gross operating revenue

Gross operating revenue represents income from the sale of food, beverages and non-food items for the year.

18. Nature of expenses (a) Cost of operating revenue:

Cost of operating revenue primarily comprises the costs to purchase or process inventory items, such as meats, seafood, dairy products and beverages, which were sold by the group to third parties during the year.






18. Nature of expenses (cont’d)

(b) Selling and administration expenses:

Group Company 2018 2017 2018 2017

Advertising 1,138,412 943,219 1,057,090 838,649 Audit fees 79,568 121,354 66,596 109,384 Bad debts [note 4(d)] 60,055 153,866 46,314 140,426 Bank charges 128,851 103,192 107,600 103,192 Cleaning and sanitation 69,589 41,736 61,518 41,736 Data processing 465,340 444,000 465,340 444,000 Donations 9,001 3,999 350 836 Garbage disposal 91,773 54,630 82,664 54,630 Insurance 444,552 479,306 410,524 446,688 Miscellaneous 506,111 690,918 236,820 271,908 Motor vehicle expenses 2,489,444 1,978,603 2,420,830 1,908,778 Penalties and interest 250,408 87,127 250,408 87,127 Pest control 21,631 17,629 20,175 17,629 Printing, postage and stationery 184,353 107,976 152,051 80,722 Professional fees 1,472,520 1,528,350 1,464,388 1,421,372 Rates and taxes 163,237 141,447 151,745 133,947 Rental of premises (note 22) 1,202,728 1,157,728 1,018,695 992,098 Repairs and maintenance 948,658 875,033 778,872 849,417 Security 424,725 400,536 379,247 355,215 Service fees 5,048 6,474 5,048 6,474 Staff costs:

Salaries, wages, and other payroll costs 8,368,872 7,640,506 7,284,357 6,835,296

Payroll taxes 820,735 744,778 782,984 717,374 Staff welfare 476,097 464,511 460,301 452,610 Subscriptions 36,750 21,995 32,490 21,995 Travel and entertainment 410,490 369,098 374,233 335,882 Utilities 1,680,455 1,458,424 1,388,118 1,234,300 $21,949,403 20,036,435 19,498,758 17,901,685 19. Disclosure of income/(expenses) Group Company 2018 2017 2018 2017

(a) Other operating income, net: Foreign exchange gains, net 190,909 27,964 185,013 27,964 (Loss)/gain on disposal of property, plant and equipment ( 41,935) 37,408 ( 41,935) 37,408 Others 141,080 98,076 116,077 4,639 $290,054 163,448 259,155 70,011






19. Disclosure of income/(expenses) (cont’d) Group Company 2018 2017 2018 2017

(b) Finance income: Interest income - third party $ 882 953 882 953 (c) Finance costs:

Interest on promissory notes (1,056,984) (1,089,764) (1,056,984) (1,089,764) Interest on long-term and short term borrowings ( 573,061) ( 654,185) ( 571,685) ( 651,357) Overdraft interest ( 40,879) ( 18,194) - ( 204) $(1,670,924) (1,762,143) (1,628,669) (1,741,325)

20. Taxation

(a) Taxation is based on the following: Group Company 2018 2017 2018 2017 Current tax 485,450 476,699 382,444 456,000

Deferred tax (note 10):

Tax losses 103,006 16,395 - - Origination and reversal of temporary differences ( 261,017) ( 225,531) ( 242,171) ( 223,134) ( 158,011) ( 209,136) ( 242,171) ( 223,134) Tax charge recognised in profit for the year $ 327,439 267,563 140,273 232,866

(b) Reconciliation of actual taxation credit: Profit before taxation $2,638,045 2,857,210 2,017,961 2,751,609

Computed “expected” tax charge at 25% and 30% 690,515 719,582 504,490 687,902 Tax effect of differences between treatment for financial statement and taxation purposes: Depreciation and capital allowances 23,599 48,496 23,599 49,311 Other items, net ( 4,232) 15,443 ( 5,373) 11,611 Tax remission [note (c)] ( 382,443) ( 515,958) ( 382,443) ( 515,958)

$ 327,439 267,563 140,273 232,866

(c) The company’s shares were listed on the Junior Market of the Jamaica Stock Exchange on July 20, 2011. Consequently, the company is entitled to a remission of taxes for 10 years in the proportions set out below, provided the shares remain listed for at least 15 years: Years 2012 to 2016 - 100% Years 2017 to 2021 - 50%






21. Earnings per stock unit

Earnings per stock unit is calculated by dividing the profit for the year by the weighted average number of ordinary shares in issue for the year as follows:

Group Company 2018 2017 2018 2017 Profit for the year attributable to the shareholders of the company $ 2,098,476 2,554,904 1,877,668 2,518,743

Weighed average number of ordinary stock units held during the year 1,100,000,000 1,100,000,000 1,100,000,000 1,100,000,000

Earnings per stock unit (expressed in ¢ per share) 0.19¢ 0.23¢ 0.17¢ 0.23¢

22. Lease commitments

At June 30, 2018, there were unexpired operating lease commitments in relation to leasehold property, payable as follows:

Group Company 2018 2017 2018 2017

Within one year 1,283,275 1,260,358 1,095,561 1,072,644

Between one and five years 3,757,146 4,450,902 3,006,290 3,700,046 After five years 5,915,846 6,324,617 5,164,990 5,448,619 $10,956,267 12,035,877 9,266,841 10,221,309

During the year, the total operating lease expenses recognised in profit or loss amounted to $1,202,728 (2017: $1,157,728) for the group and $1,018,695 (2017: $992,098) for the company.

23. Contingent liabilities

(a) In 2016, Tax Administration Jamaica (TAJ) conducted a GCT audit for the period January

2012 to December 2015 and proposed an adjustment to the returns for the period. No formal assessment has been served in this regard. During the year, the management and directors continued discussions with TAJ and other relevant authorities to review and resolve the proposed adjustments. At the date of authorisation of these financial statements, the resolution process is still ongoing.

(b) The company has given guarantees in the ordinary course of business, under banking arrangements, in favour of the Collector of Customs in the amount of $369,305 (J$47,500,000). Additionally a letter of credit was issued amounting to $125,000 on behalf of the company in favour of a third party.






24. Dividends

On November 17, 2017, the Board of Directors declared an interim dividend of $0.06 per stock unit payable on January 19, 2018 to shareholders on record as at December 15, 2017 with an ex-dividend date of December 13, 2017.

25. Financial instruments (a) Financial risk management: The group has exposure to the following risks from its use of financial instruments:

credit risk; liquidity risk; and market risk. This note presents information about the group’s exposure to each of the above risks, the group’s objectives, policies and processes for measuring and managing risk, and the group’s management of capital.

The Board of Directors has overall responsibility for the establishment and oversight of the group’s risk management framework.

The risk management policies are established to identify and analyse the risks faced by the group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the group’s activities. The Board of Directors has monitoring oversight of the risk management policies.

(i) Credit risk:

Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations.

The maximum exposure to credit risk at the reporting date was represented by the carrying value of financial assets in the statement of financial position.

Cash and cash equivalents The group limits its exposure to credit risk by placing cash resources with substantial counterparties who are believed to have minimal risk of default.

Accounts receivable

The group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer base, including the default risk of the industry in which customers operate, has less of an influence on credit risk. The group does not require collateral in respect of trade and other receivables.






25. Financial instruments (cont’d) (a) Financial risk management (cont’d):

(i) Credit risk (cont’d):

Accounts receivable (cont’d)

Trade receivables mainly consist of balances due from retail and hospitality customers across Jamaica. Apart from the concentration of customers in Jamaica, the group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics.

The group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The allowances for impairment losses are based on the aging of the receivables, with allowance made for balances outstanding for over 180 days that appear to be uncollectable. The group also provides for receivables that are overdue for less than this time period, based on information that the receivable balance is uncollectible. There were no changes in the group’s approach to managing credit risk during the year.

(ii) Liquidity risk:

Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. Liquidity risk may result from an inability to sell a financial asset at, or close to, its fair value. Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities.

Management of the group manages liquidity risk by maintaining adequate liquid

financial assets with appropriate terms and currencies, together with committed financing to meet all contractual obligations and operational cash flows, including the servicing of its long-term liabilities.

The following are the contractual maturities of financial liabilities measured at

amortised cost, including interest payments. The tables show the undiscounted cash flows of non-derivative financial liabilities based on the earliest date on which the group can be required to pay.







(ii) Liquidity risk (cont’d):

Group 2018

Carrying Contractual 1 year amount cash flows or less 2-9 years Bank overdraft 776,993 776,993 776,993 - Short-term loans 1,700,000 1,772,250 1,772,250 -

Accounts payable 10,134,927 10,134,927 10,134,927 - Short-term promissory notes 4,317,794 4,653,429 4,653,429 - Long-term promissory notes 8,269,110 9,608,168 - 9,608,168 Long-term borrowings 6,357,869 7,617,587 729,623 6,887,934 Due to related company 2,736,203 2,736,203 - 2,736,203

Total financial liabilities $34,292,896 37,299,557 18,067,222 19,232,305

Group 2017

Carrying Contractual 1 year amount cash flows or less 2-9 years Bank overdraft 243,222 243,222 243,222 - Short-term loans 2,500,000 2,662,500 2,662,500 -

Accounts payable 7,237,075 7,237,075 7,237,075 - Short-term promissory notes 4,317,794 4,653,429 4,653,429 - Long-term promissory notes 9,267,668 10,762,495 - 10,762,495 Long-term borrowings 5,829,290 6,739,313 753,072 5,986,241 Due to related company 2,744,004 2,744,004 - 2,744,004

Total financial liabilities $32,139,053 35,042,038 15,549,298 19,492,740 Company 2018

Carrying Contractual 1 year amount cash flows or less 2-9 years Short-term loans 1,700,000 1,772,250 1,772,250 -

Accounts payable 8,474,046 8,474,046 8,474,046 - Short-term promissory notes 4,317,794 4,653,429 4,653,429 - Long-term promissory notes 8,269,110 9,608,168 - 9,608,168 Long-term borrowings 6,357,869 7,617,557 729,623 6,887,934 Total financial liabilities $29,118,819 32,125,450 15,629,348 16,496,102







(ii) Liquidity risk (cont’d):

Company 2017

Carrying Contractual 1 year amount cash flows or less 2-9 years Short-term loans 2,500,000 2,662,500 2,662,500 -

Accounts payable 5,955,323 5,955,323 5,955,323 - Short-term promissory notes 4,317,794 4,653,429 4,653,429 - Long-term promissory notes 9,267,668 10,762,495 - 10,762,495 Long-term borrowings 5,799,727 6,706,594 739,671 5,966,923 Total financial liabilities $27,840,512 30,740,341 14,010,923 16,729,418

There were no changes to the group’s approach to liquidity risk management during

the year.

(iii) Market risk:

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate as a result of changes in market prices. These arise mainly from changes in interest rates and foreign exchange rates and will affect the group’s income or the value of its holdings of financial instruments.

The objective of market risk management is to manage and control market risk

exposures within acceptable parameters, while optimising the return on assets. The nature of the group’s exposures to market risk and its objectives, policies and processes for managing these risks have not changed significantly over the prior year. For each of the major components of market risk, the group has policies and procedures in place which detail how the risk is managed and monitored. The management of each of these major components of market risk and the exposure of the group at the reporting date to each major risk are addressed below.

Derivative financial instruments are not used to reduce exposure to fluctuations in interest and foreign exchange rates.

Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates.

The group materially contracts financial liabilities at fixed interest rates. These

primarily relate to borrowings which are subject to interest rates fixed in advance, but which may be varied with appropriate notice by the lenders.







(iii) Market risk (cont’d):

Interest rate risk (cont’d)

Interest-bearing financial assets are primarily represented by cash and cash equivalents, which are contracted at various interest rates.

Financial instruments are subject to interest as follows:

Carrying amount

The Group The Company 2018 2017 2018 2017

Fixed rate instruments:

Financial assets 1,258,124 1,046,205 1,258,124 1,046,205 Financial liabilities (18,771,845) (18,926,983) (17,994,853) (18,654,198) $(17,513,721) (17,880,778) (16,736,729) (17,607,993) Variable rate instruments: Financial assets 74,578 98,889 74,578 98,889 Financial liabilities ( 2,108,900) ( 2,580,991) ( 2,108,900) ( 2,580,991) $( 2,034,322) ( 2,482,102) ( 2,034,322) ( 2,482,102)

Cash flow sensitivity analysis for variable rate instruments An increase or decrease in basis points in interest rates at the reporting date would have (decreased)/increased profit for the year by amounts shown below:

The Group and the Company

2018 2017 Increase Decrease Increase Decrease 100bp 50bp 100bp 50bp

Effect on profit (decrease)/increase (20,343) 10,172 (24,821) 12,411

Fair value sensitivity analysis for fixed rate instruments

The group does not account for any fixed rate financial instrument at fair value. Therefore, a change in interest rates at the reporting date would not affect the profit or other comprehensive income recognised for the year.







(iii) Market risk (cont’d): Foreign currency risk

Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The group incurs foreign currency risk primarily on receivables, purchases and borrowings that are denominated in a currency other than the United States dollar. The principal foreign currency risks of the group are denominated in Jamaica dollar (J$).

The group ensures that the risk is kept to an acceptable level by monitoring its risk

exposure and by maintaining funds in J$ as a hedge against adverse fluctuations in exchange rates. At the reporting date, net foreign currency liabilities of the group and the company are as follows: Group and Company

2018 2017 Cash and cash equivalents 117,249,887 190,786,530 Accounts receivable 604,850,332 431,517,278 Accounts payable (212,689,346) (234,743,921) Long-term borrowings (678,974,802) (429,652,999) Net foreign currency liabilities $(169,563,939) ( 42,093,112) Equivalent to $( 1,301,035) ( 327,267)

Exchange rates for the J$ in comparison to the United States dollar were as follows:

J$

June 30, 2018: $130.33 June 30, 2017: $128.62

Sensitivity analysis

Changes in exchanges rates would have the effects described below:

Group and Company (Decrease)/increase in profit for the year 2018 2017

4% (2017: 1%) strengthening against the US$ (52,041) ( 3,273) 2% (2017: 6%) weakening against the US$ 26,021 19,636 The analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is done on the same basis as for 2017.






25. Financial instruments (cont’d)

(b) Capital risk management: The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns for shareholders. The directors of the company seek to maintain a strong capital base so as to maintain shareholder and creditor confidence. The group defines capital as total shareholders’ equity.

Management of the group is responsible for monitoring the group’s adherence to loan covenants on a timely basis and also to obtain relevant approvals from the bank before certain decisions are finalised.

There were no changes in the group’s approach to capital management during the year.

(c) Fair value disclosures: The fair values of cash and cash equivalents, accounts receivable, bank overdraft,

accounts payable and short-term loans and promissory notes are assumed to approximate their carrying values due to their relatively short-term nature. Long-term borrowings and promissory notes are carried at their contracted settlement value based on commercial terms. Amounts due to related companies are considered to approximate their carrying value due to their short-term nature, and/or an ability to effect future set-offs in the amounts disclosed.





Notes

I/We __________________________________________________________________________________________(insert name)

of _______________________________________________________________________________________________(address)

being a shareholder(s) of the above-named Company, hereby appoint:

______________________________________________________________________________________________ (proxy name)

of ________________________________________________________________________________________________(address)

or failing him, ________________________________________________________________________________(alternate proxy)

of ________________________________________________________________________________________________(address)

as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at 3:00 p.m. on Monday, 12 February 2019 at Sunscape Splash, Montego Freeport, St. James and at any adjournment thereof. I desire this form to be used for/against the resolutions as follows (unless directed the proxy will vote as he sees fit):

Form of Proxy

The following Directors of the Board, having resigned by rotation in accordance with the Articles of Incorporation of the Company, and, being eligible, hereby offer themselves for re-election by the shareholders:

No. Resolution details Vote for or against (tick as appropriate)

1.

2(a)

2(b)

2(c)

3.

4.

To receive the report of the directors and the audited accounts of the Company for the financial year ended June 30, 2018.

To re-appoint Mr. Robert J. Hooker as a Director of the Company.

To re-appoint Mr. Ronald Schrager as a Director of the Company.

To re-appoint Mr. Richard M. Hall as a Director of the Company.

To authorise the directors to re-appoint KPMG as the Auditors of the Company and to fix their remuneration.

To fix the remuneration of the Directors, other than the Executive Directors, for the financial year of the Company ending June 30, 2019.

For ( ) Against ( )

For ( ) Against ( )

For ( ) Against ( )

For ( ) Against ( )

For ( ) Against ( )

For ( ) Against ( )

Signed this____________day of __________________________ 2019: ___________________________________________________ Signature of Shareholder Signed: _____________________________________ (signature of primary shareholder)

Name: _____________________________________ (print name of primary shareholder)

Signed: _____________________________________ (signature of joint shareholder, if any)

Name: _____________________________________ (print name of joint shareholder, if any)

PLACE POSTAGE STAMP


As we approach our 25th year, we thank our Customers,

Employees and Partners for their unwavering support.

We are destined for excellence.

destined for excellenceto ensure the success of our customers. vision to expand in new markets while...

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